_In response to the COVID-19 crisis, the Luxembourg government has decided to enact a series of direct and indirect tax measures. Please find some of them below.
Direct tax measures
The deadline for submitting tax returns has been extended to 30 June 2020. This measure applies to both legal entities and natural persons (Luxembourg residents and non-residents).
Furthermore, legal entities and natural persons carrying out an activity generating a commercial profit, an agricultural and forestry profit, or a profit from the exercise of a liberal profession in Luxembourg, who are experiencing liquidity problems due to the COVID-19 pandemic, can apply for a cancellation of the two first quarterly advance tax payments of the year 2020 (due in March and June 2020). Only tax prepayments for (corporate) income tax and municipal business tax are concerned by this measure (not the net wealth tax advances).
Legal entities and natural persons may also apply for a four-month payment deadline for (corporate) income tax, municipal business tax, and/or net wealth tax without interest for late payment. Only taxes with a due date after 29 February 2020 can benefit from this measure.
To benefit from these two aforementioned measures, it is sufficient for the eligible taxpayer to send the two newly created forms to the competent tax office of the Administration des contributions directes. The request is automatically accepted upon receipt by the tax authorities.
Indirect tax measures
The deadline for filing the returns in relation to the subscription tax (taxe d’abonnement) of the 1st quarter of 2020 expires on 20 April 2020. In case this deadline is exceeded, the usual fines will not be taken into account if this excess is due to the exceptional circumstances of COVID-19.
Due to COVID-19, no fines will be levied when VAT returns are filed late (normally, such fines can range between EUR 250 and EUR 10,000). This tolerance applies until otherwise indicated by the VAT authorities.
As announced by the Luxembourg finance ministry in a news release dated 17 March 2020, the Luxembourg VAT authorities started from 16 March 2020 to reimburse all VAT credit balances below EUR 10,000. According to the statement of the Luxembourg Ministry of Finance, “this measure allows to satisfy the liquidity needs of around 20,000 companies established in the Grand Duchy”.
In addition, the Luxembourg VAT authorities advise to use the various online services available (i.e. Facebook, email, direct telephone, website etc.) in case a client needs to contact them. The Luxembourg VAT authorities offices remain open to the public, but will only be accessible after making a prior appointment.
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Watch Episode 4 of our COVID-19 Webcast Series: Temporary Changes to Luxembourg Company and Tax Law