Article Post on 02 April 2020

Episode 4 - COVID-19 Webcast - Temporary Changes to Luxembourg Company and Tax Law

_This is the fourth episode of our COVID-19 webcast series. In this episode Partner Mark Shaw wants look at Luxembourg company and tax law relief measures in response to the COVID-19 pandemic. 

Transcription of the video:

On 18 March the Government declared a state of emergency, lasting up to three months. 

Acting under emergency powers, the government enacted temporary measures allowing Luxembourg companies (private  or listed), to hold their shareholder or board meetings without any participants attending in person. 

A company may hold any general meeting without a physical meeting, and require its members to attend the meeting and exercise their rights exclusively:

  • by voting from a remote location in writing or electronically, provided that the full text of the resolutions or decisions to be taken has been published or communicated to them,
  • through a proxy holder appointed by the company, or
  • by video conference or other telecommunication means permitting their identification.

The provisions also apply to boards of directors or managers, which may be held remotely or with board resolutions in writing:

  • board participants joining via through video conference will be considered present for the purposes of determining quorum and majorities;

Companies are also allowed to convene their annual general meeting on the later of:

  • six months from the end of their financial year, and 
  • a date within a period ending 30 June 2020.

These rules apply regardless of any contrary provision in the articles of association of the relevant company and regardless of the number of participants. 

Tax

The Government has implemented several fiscal measures in favour of legal entities and individuals.

The objective is to alleviate the liquidity needs of companies and self-employed persons who are heavily impacted by the current economic conditions. 

As long as they are experiencing liquidity problems as a result of COVID-19, taxpayers may apply for:

  • a cancellation of their quarterly advances of income tax (corporate income tax) and communal business tax for the 1st and 2nd quarter of 2020, and
  • a payment deadline extension for these taxes and also for wealth tax.

Requests for cancellation of advances, and for payment deadlines are automatically accepted by the administration.

In addition, the deadline for submitting tax returns has been extended to 30 June 2020. 

For funds, the deadline for filing Q1 returns in relation to subscription tax expires on 20th April 2020. If a delay in filing is due to exceptional circumstances caused by COVID-19 then the administration will consider this.

Similarly, on VAT, there is a relaxation of fines for late filings, which would otherwise be automatically generated.

Finally, for smaller businesses, the Luxembourg VAT authorities are going through a process of reimbursing all VAT credit balances below €10,000. This is expected to benefit up to 20,000 small businesses in Luxembourg.

If you are in any doubt as to how to handle the legal issues arising out of the COVID-19 pandemic, please do use our helpline or visit our COVID-19 toolkit.

In the next episode we will focus on the issues associated with BCP remote working that has arisen out of the COVID-19 pandemic, and Mark Shaw will be joined by George Ralph, Managing Director of RFA, the IT, financial cloud and cyber-security provider. 

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