Luxembourg’s Council of Ministers took a step by adopting a draft Grand-Ducal regulation concerning tax credits and qualified holdings under the Minimum Taxation Law (MTL) On 24 July 2024, which implements the EU’s Minimum Taxation Directive (2022/2523). This regulation is important for multinational enterprises and large domestic groups with consolidated annual revenues exceeding EUR 750 million in at least two of the previous four fiscal years.
Key Features of the Draft Regulation
- Tax credits and qualified holdings: The regulation aims to clarify the application of tax credits and the treatment of qualified holdings, which are essential for calculating the minimum tax obligations under the Minimum Taxation Law (MTL).
- Minimum tax rate: The Minimum Taxation Law (MTL) establishes a global minimum corporate tax rate of 15% for large multinational groups with consolidated annual revenues exceeding EUR 750 million in at least two of the previous four fiscal years, ensuring that these entities contribute a fair share of taxes irrespective of their operational jurisdictions.
- Compliance with OECD guidelines: The draft regulation incorporates administrative guidelines from the OECD, particularly regarding the computation of the QDMTT and the introduction of safe harbour provisions, which offer tax certainty to businesses.
- Rules for MTL currency determination: The draft Grand-Ducal Regulation seeks to set guidelines for identifying the functional currency used in MTL calculations and for converting currencies as necessary for those calculations.
