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On May 8, 2012, the Prime Minister Jean-Claude Juncker
presented to the Chamber of Representatives the annual "State
of the Nation" speech regarding the economic, social and
financial country's situation.
Hereafter a selection of the main measures contemplated by the
Luxembourg Government. Additionals news will be published when more
information (e.g draft bills) is available on the proposed
measures.
Investments:
Although investments remain at a satisfactory level (1.800 EUR
million estimated for 2012), they will be reduced (125 EUR million
less than initially planned): some constructions projects will not
be achieved including by example road infrastructures.
However, large amounts will continue to be invested in research
and development sector and in the IT and broadband sector. In new
technologies, Luxembourg is well underway, with 1000 new jobs
created. Sector growth will continue despite the programmed
modification of the VAT regime applicable to electronic commerce as
from 2015 (see below). Investment in data centers and networks will
continue. The satellite industry will do its part in this
development.
Taxation:
The 0,8% crisis contribution, which entered into force on
January 1, 2011 applied on professional and replacement income as
well as to all categories of non-professional income taxable in
Luxembourg. This contribution was repealed with effect January 1,
2012. The Prime Minister has confirmed that this crisis
contribution will not be reintroduced for 2013, cutting off
definitively the rumours.
Maximal individual tax rate could be increased to 42,7%.
Currently, the maximum tax rate of 38% is applicable to taxable
income between EUR 39,885 and EUR 41,793 and 39% to taxable income
exceeding EUR 41,793.
The surcharge for the employment fund (the so-called
"solidarity tax") added to the income tax rates will be
increased by 2% as from January 1, 2013. Currently, the surcharge
rate for individuals is 4% for income not exceeding EUR 150,000
(EUR 300,000 for couples taxed jointly) and 6 % for income above
.This solidarity tax could be applied to the municipalities as
well.
Application of a specific tax for vacant accommodation. If
certain municipalities have already the possibility to tax the
vacant accommodation, they rarely use this opportunity. In order to
establish the rules and the criterias of the application of that
specific tax, a vademecum will be communicated to the
municipalities.
VAT remains unchanged during this legislative period but
modifications are planned for 2015. Currently, VAT for
electronically supplied services is charged and paid in the
provider's country: Luxembourg is very attractive with its 15%
standard rate. As from January 1, 2015, VAT will be charged in the
Member State where the customer has his residence.
Social measures:
The Government plans to finalize a pension reform.
Increase of the minimal social wage as of January 1, 2013.
No taxation or reduction in family allowances but increase of
family participation in certain services
("chèques-services" by example).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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