The Luxembourg Parliament passed legislation that introduced amendments to the Corporate Income Tax (CIT) Law and the Net Wealth Tax (NWT) Law, among other changes on 11 December 2024.
Reduction in corporate income tax rate
The new legislation reduces the CIT rate by 1%, lowering the global tax rate for companies operating in Luxembourg City with taxable income above EUR 200,000. For the 2025 tax year, the rate will decrease from 24.94% to 23.87%.
Mandatory e-filing for withholding tax returns
Starting from 1 January 2025, the law mandates the electronic filing of withholding tax returns for directors’ fees, as well as for remuneration and pension returns filed by employers, interim staffing agencies, certain public organisations, and other specified entities. This requirement extends to additional types of returns as well.
New minimum Net Wealth Tax
Beginning in the 2025 tax year, Luxembourg-resident companies will face a minimum NWT ranging from EUR 535 to EUR 4,815, depending on the total value of their balance sheets. This amendment simplifies the previous structure, aligning the tax more closely with the size of the company’s assets.
Amendment to interest deduction limitation rules for single-entity groups
A technical amendment to the interest deduction limitation rules allows taxpayers classified as a “single-entity group” to deduct excess borrowing costs if their equity-to-assets ratio meets or exceeds that of the group, excluding debts to associated enterprises. This new rule is separate from the existing group equity ratio escape clause.
However, taxpayers eligible for voluntary tax consolidation or excluded due to small size or insignificant interest exemptions are not eligible. An anti-abuse provision prevents taxpayers from artificially increasing their equity ratio to qualify for this measure.
SPF (société de gestion de patrimoine familial) tax regime
The law updates the tax regime for family wealth management companies and raises the minimum subscription tax from EUR 100 to EUR 1,000.
It also empowers the indirect tax authorities to impose administrative fines of up to EUR 250,000 for non-compliance with SPF legal obligations. A six-month grace period is granted to address any identified breaches. If the breaches are not resolved within this period, the benefits of the SPF regime may be permanently revoked.
Earlier, Luxembourg’s Finance Minister Gilles Roth presented a Bill n° 8414 to the parliament on 17 July 2024, aiming to reduce corporate income tax (CIT) rate and implement various tax relief measures.
