Luxembourg 2021 Budget — Tax Measures

Keith O’Donnell and Samantha Schmitz of ATOZ Tax Advisers provide an overview of some significant tax measures introduced in the Luxembourg 2021 budget draft law.

The 2021 budget draft law (the draft law) was presented to the Luxembourg Parliament on October 14, 2020. Given the current context of crisis, the government decided that it was not the right time to increase taxes and/or perform a major tax reform and decided to postpone the introduction of some expected tax measures such as the reform of the tax class system for individuals. However, the draft budget still introduces a number of important tax measures, some of which were already announced in the 2018 coalition agreement: changes in the taxation of Luxembourg real estate investments held by investment funds, repeal of the “warrant” regime, reform of the impatriate regime and the introduction of a reduced rate of subscription tax for sustainable funds.

We provide an overview of the main tax measures to be introduced as from 2021. However, the proposed rules may still evolve throughout the legislative process.