As part of the implementation of a variety of measures decided by the Luxembourg Government to deal with the coronavirus, a series of measures designed to guarantee the continuity of the Luxembourg economy have been put in place. As part thereof, the Luxembourg tax authorities announced that Luxembourg companies and individuals that earn commercial, agricultural and forestry, or liberal profit and are experiencing liquidity problems as a result of the COVID-19 pandemic may request the Luxembourg tax authorities to:
- cancel, reduce or delay the payment of the Q1 and Q2 tax advances for corporate income tax (CIT) and municipal business tax (MBT); and/or
- grant an extension of the deadline for the payment of CIT, MBT and/or net wealth tax due. This extension of the deadline is available for the taxes referred to that (have) become due after 29 February 2020.
Requests for cancelation of advances or payment deadline extension are automatically accepted by the Luxembourg tax authorities. In addition to the above, Luxembourg companies and individuals benefit from an extension of the deadline for the filing of their income tax returns to 30 June 2020. We note that wage taxes fall outside of any of the measures and are therefore due in accordance with legal deadlines.
As regards indirect taxes, i.e. VAT, the Luxembourg tax authorities announced that the exceeding of deadlines by taxpayers will not be sanctioned administratively, i.e. no penalties will be issued. The announcement remains in force until repealed.
Finally, as regard Belgian cross-border workers, the Belgium and Luxembourg authorities have agreed that due to the coronavirus measurements, days as from 14 March 2020 do not need to be taken into account when applying the 24-days rule as included in the protocol to the tax treaty between Belgium and Luxembourg. Also this announcement remains in force until repealed. The protocol to the treaty includes a rule of tolerance of 24-days that can be worked in the country of residence without further consequence.
The above measures are comparable to the measures introduced by the Dutch tax authorities. Please read our blog of 16 March 2020 in that respect.