Luxembourg Implements Pillar Two Directive On Time

On 20 December, the Parliament adopted the bill of law implementing the EU directive on global minimum taxation rules (so-called "Pillar Two" or "GloBE rules"). The main top-up tax rule and the domestic minimum top-up tax will apply in tax years starting on or after 31 December 2023, in line with the schedule foreseen in the directive. The law is likely to be further amended during 2024 to incorporate additional OECD guidance which goes beyond mere interpretation of existing rules.

Background

The OECD's Pillar Two project aims to ensure that Multinational Enterprises (MNE) groups meeting the EUR 750 million consolidated revenue threshold are always subject to a minimum corporate taxation of 15%. Much progress has been made in the past two years: