Draft Law On Exit Taxation

On March 15^th 2013, a draft law on the taxation of the latent gains in case of transfer of an enterprise or a permanent establishment outside Luxembourg (the "Draft Law") was submitted to the Luxembourg Parliament.

The Draft Law is a response to the infringement process launched by the European Commission against Luxembourg about the exit taxation applicable in Luxembourg. The European Commission recognises the right to a Member State to tax any capital gain with respect to a period during which the taxpayer was resident in Luxembourg or the assets were located in Luxembourg but the tax should not be immediately payable upon the transfer of residence or assets out of Luxembourg. Currently, taxpayers have the possibility to request a deferral of the exit tax but the conditions provided for in the law were viewed by the European Commission as too severe. The Draft Law provides for new rules on exit taxation