IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 07 Jun 2014 | Removal date: open ended
Still in force

FDI: Treatment and operations, nes

 On 26 May 2014, Luxembourg amended its law on income tax allowing companies moving to another country in the European Economic Area (henceforth: EEA) to defer their income tax ("exit tax"). With the new provisions, the entity may repay the outstanding tax at a later stage without incurring interest.
Previously, the tax deferral was only available if the Luxembourg tax authorities decided the exit tax caused a considerable hardship for the entity concerned. The changed provisions come after the European Court of Justice judged in multiple cases the exit taxes to be incompatible with the single market rules (cf. Secondary Sources).
The amendment came into effect three days after its publication in the Luxembourg Official Gazette, i.e. on 7 June 2014.
As the measure reduces the barriers for companies to move within the EEA, it is classified as green.

AFFECTED COUNTRIES

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