LUXEMBOURG: DRAFT LEGISLATIVE PROPOSALS TO IMPLEMENT BEPS MEASURES

The Luxembourg government submitted draft legislative proposals to Parliament—legislation that, if enacted, would both implement certain provisions of the OECD’s base erosion and profit shifting (BEPS) actions and provide for certain EU-compliant measures. The proposals also would be intended to improve the competitiveness of the Luxembourg tax system.

The proposals in Budget Bill for 2016 (submitted 14 October 2015) would repeal Luxembourg’s current tax treatment of intellectual property (IP). As a first step towards compliance with the “nexus” approach, as recommended by the OECD for IP regimes in the BEPS action 5 final recommendation (issued 5 October 2015), the Budget Bill would repeal, as from 1 July 2016, the existing IP regime. The current IP regime provides (1) a corporate income tax exemption (80%) of net income and capital gains deriving from qualifying IP rights; and (2) a full net wealth tax exemption.

Read an October 2015 report [PDF 109 KB] prepared by the KPMG member firm in Luxembourg: Luxembourg – New proposed tax measure for 2016