Trésorier/Treasurer magazine - N°87 - Oct/Nov/Dec 2014 - (Page 6)

Lux News Luxembourg Tax News LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE - N°87 - OCT / NOV / DEC 2014 INDIRECT TAX Increase of VAT on secondary dwellings envisaged 6 As announced by the government, an increase of 2 points should be effective as of 1 January 2015 on all VAT rates, except on the super-reduced rate of 3% that remains unchanged. This super-reduced rate applies among others to the construction and renovation of a dwelling, provided that it is used as the main residence, either directly by the owner or indirectly by the tenant. Going forward, it is envisaged to apply the aforementioned rate only for the acquisition or renovation work of the main residence or domicile («résidence principale»), and no longer for dwellings intended for rental. As a consequence, as from 1 January 2015 on, the VAT applicable to dwellings intended for rental would raise from currently 3% to 17%. Michel Lambion, Indirect Tax Partner, EY Luxembourg Yannick Zeippen, Indirect Tax Partner, EY Luxembourg Jacques Verschaffel, Executive Director, EY Luxembourg DIRECT TAX Update on double taxation treaties Pierre Gramegna, Minister of Finance, has signed a double tax treaty in respect to taxes on income and wealth with representatives of Andorra and Croatia. Furthermore, a protocol amending the double tax treaty between Luxembourg and Lithuania and Tunisia has been signed, as well as a new treaty with Estonia aiming at replacing the former treaty dated 2006. The law amending various existing treaties (n°6633) and ratifying new treaties has been published in the Memorial. The countries concerned are Denmark and Slovenia for amendments to existing treaties and Saudi-Arabia, Guernsey, Isle of Man, Jersey and Czech Republic for new treaties. Since the conditions for the entry into force of the double tax treaty between Luxembourg and the Czech Republic have been fulfilled, the treaty is applicable as from 31 July 2014 on. Finally, the Parliament has adopted on 9 July 2014 the draft law on the double taxation agreement with Taiwan as amended by the Budget and Finance Commission. The amendment related to the legal qualification of the document: since the agreement between the Luxembourg tax administration and the Tax Agency of the Taipei Finance Ministry has not been concluded with a subject of international law, it does not constitute a treaty neither in the sense of article 37 of the Luxembourg Constitution nor in the sense of international laws. Luxembourg enacts exit tax deferral rules Luxembourg has enacted legislation on exit taxation that introduces the possibility to opt for a payment deferral of the tax normally due upon transfer of (i) the statutory seat and place of effective management of a resident company and of (ii) a Luxembourg undertaking or permanent establishment to another Member state of the European Economic Area (EEA). At the same time, the law modifies the existing roll-over of the capital gains regime: going forward, the regime is also granted if the replacement asset is allocated to a permanent establishment situated in an EEA Member state in order to ensure equal taxation as if the asset would have been allocated to a Luxembourg permanent establishment. Tax authorities issue Circular letter on functional currency Tax authorities have issued Circular letter L.G.-A n°60 dated 16 June 2014 providing a framework of rules for companies drawing their annual accounts in a foreign currency and wishing to declare their commercial result, as well as their taxable income, by converting the amounts determined in such foreign currency into euros (functional currency method). The Circular letter also provides guidance on the transition from a euro-denominated tax balance sheet to the functional currency method. Draft law modifying net wealth tax regime The government has adopted a law aiming at modifying the valuation and net wealth tax law, as well as various provisions regarding the collection of direct taxes, excise duties on spirits and social security contributions. The draft law mainly provides for technical amendments regarding the annual determination of the net wealth tax of companies. Under the current law, net wealth tax is determined based on the unitary value to be assessed every 3 years.

Table des matières de la publication Trésorier/Treasurer magazine - N°87 - Oct/Nov/Dec 2014

COUVERTURE
SOMMAIRE
EDITORIAL
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW BEPS
FOCUS
FORUM
CORPORATE FINANCE
15 MINUTES WITH La garantie locative
THE FINANCIAL RISK OBSERVATORY
NEWS

Trésorier/Treasurer magazine - N°87 - Oct/Nov/Dec 2014