First Covid-19 support measures for taxpayers

On 17 March 2020, the Luxembourg Government  announced that it will implement a first series of measures for direct and indirect taxes whose main objective is to alleviate the financing and liquidity needs of corporations and self-employed persons seriously affected by the current economic environment.

Accordingly, individuals and companies facing liquidity problems may benefit from the following tax supporting measures:

Direct tax 

• Automatic cancellation of the first and second quarterly advance payments for (i) personal income tax, (ii) corporate income tax (normally due on 10 March 2020 and 10 June 2020) and (iii) municipal business tax (normally due on 10 February 2020 and 10 May 2020), upon explicit request of taxpayers realising earnings from commercial, agricultural or self-employment activities. The relevant request form can be downloaded here. Alternatively, the taxpayer could also simply reduce the amount of the first and second quarterly advance payments without cancelling them. The taxpayer must submit this request by mail or e-mail to the competent tax office.
• Automatic four months tax deferrals for personal and corporate income tax, municipal business tax and net wealth tax (excluding withholding tax on wages and salaries) due after 29 February 2020 upon explicit request of taxpayers, without late interest penalty. The relevant form can be downloaded here.
• Extension period for filing obligations of personal and corporate income tax returns until 30 June 2020 (instead of 31 March) for both individual taxpayers and corporate taxpayers, Luxembourg residents and non-residents.

The deadline for filing, amending or revoking taxpayers’ choice for a separate taxation is also extended to 30 June 2020.

Indirect taxes 

One week after the Government’s announcement of 17 March 2020, the Administration de l’Enregistrement, des Domaines et de la TVA (the tax authority in charge of indirect tax matters) started to proceed with the refund of all pending VAT credit balances up to €10,000 (the refund of VAT credit balances above €10,000 is already provided under a specific procedure laid down in Article 55.3 of the Luxembourg VAT law).