The Luxembourg tax authority published a circular L.I.R. no. 174/1 on 1 August 2013. This relates to the Minimum Corporate Income Tax (MCIT). The most significant parts of the circular are given below:
- Luxembourg permanent establishments are not applying to the Minimum Corporate Income Tax (MCIT) 2013.
- Assets and real estate allocated to a foreign PE are taken into account for the calculation of the Minimum Corporate Income Tax (MCIT) applicable for the year 2011 and 2012. Though, an exemption applies if all assets of a company were allocated to a foreign PE;
- Participations in a partnership will, for the assessment of the tax, be treated as a financial fixed asset;
- Local and foreign tax credits cannot decrease the corporate income tax lower the amount of the Minimum Corporate Income Tax (MCIT);
- The Minimum Corporate Income Tax (MCIT) does not affect the loss carry forward;
- The companies dissolved or incorporated during a year have to pay the full amount of tax and they are not entitled to a pro rata reduction;
- If a company is involved in a merger or demerger the balance sheet as at the day of the merger or demerger shall build the basis for the determination of the Minimum Corporate Income Tax (MCIT).
