On 19 December 2023, the Luxembourg Chamber of Deputies adopted Bill 8276 on the modernization of the investment tax credit. The investment tax credit bill will be effective from 2024.
The bill includes several amendments to the investment tax credit framework. Notably, the overall investment tax credit rate would rise from the existing 8% to 12%, and the previous EUR 150,000 limit would be removed. This 12% credit applies primarily to investments in tangible depreciable assets (excluding buildings, livestock, mineral, and fossil deposits), as well as software acquisitions.
The rate for special depreciation on qualifying fixed assets has been raised to 14%. These changes aim to encourage increased investment and support specific asset categories, fostering economic growth and modernization.
The bill also proposes an investment tax credit of 18% for qualifying investments and business expenses, except for tangible depreciable assets, which receive a 6% credit. However, investments in such assets will ultimately qualify for an 18% credit due to a combination of a 12% global tax credit and an additional 6% credit. The credit is based on the acquisition or production cost of eligible investments within the fiscal year, as well as deductible operating expenses.
