Key Changes For 2018

The most important changes can be summarised as follows:

• Extension of the investment tax credits to acquired software from unrelated parties and zero-emission cars;
• Amendment of Article 171 of the Luxembourg income tax law to clarify the tax exemption of capital gains realised in the context of a merger;
• Extension of the VAT exemption for management of investment fund services to include collective internal funds held by a life insurance undertaking whose investment risks are borne by the policyholders and which are subject to the supervision of the Luxembourg Insurance Authority (Commissariat aux assurances) or equivalent supervision in another EU Member State;
• Reduction of the corporate tax rate from 19% to 18%, leading to an effective combined tax rate of 26.01% for corporate entities established in Luxembourg City;