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On 9 October 2024, Luxembourg’s government introduced its 2025 draft Budget law (number 8444) to the Luxembourg Parliament, referred to as the Draft Law.
This Budget aims to make Luxembourg’s economy more competitive, strengthen its financial centre, and improve the purchasing power of households.
In this article, we explore the key tax changes proposed in the Budget and what they mean for individuals and businesses.
The Luxembourg government proposes a reduction in the taxable base for registration and transcription duties on real estate transactions. This change is aimed at boosting the housing market. Here’s how it works:
To qualify for this reduction, the property must:
For those buying real estate between 1 October 2024 and when the Draft Law officially comes into force, a written request for a recalculation of duties must be submitted to the relevant authorities.
The reduction applies between 1 October 2024 and 30 June 2025.
In line with Luxembourg’s environmental goals, the Draft Law includes an increase of €24 to the CO₂ tax credit, bringing it to €192 starting from 1 January 2025.
This tax credit is designed to offset the impact of the CO₂ tax on individuals with low or moderate incomes, aligning with Luxembourg’s environmental commitment while supporting household finances.
The Draft Law also references additional measures initially proposed in draft law number 8414, dated 17 July 2024, which include:
These additional measures are designed to complement Luxembourg’s broader fiscal goals, aiming to foster economic growth and maintain Luxembourg’s competitive edge as a financial centre.
Luxembourg’s 2025 Budget brings forward several significant tax changes with the potential to benefit both the real estate market and individuals.
The reduction in real estate duties is expected to encourage housing investment, while the increased CO₂ tax credit aims to make environmentally friendly policies more affordable for lower- to middle-income residents.
Together with the personal and corporate income tax changes, these adjustments reflect Luxembourg’s commitment to economic resilience and sustainability.
If you have any queries about this article on Luxembourg’s 2025 Budget or tax matters in Luxembourg, then please get in touch.
Alternatively, if you are a tax adviser in Luxembourg and would be interested in sharing your knowledge and becoming a tax native, there is more information on membership here.
In a recent case, Denmark issued a ruling on the concept of Permanent Establishment (PE), which has important implications for businesses that operate across borders.
This ruling followed a case involving a Swedish company’s CEO working part-time in Denmark, raising questions about when a business is deemed to have a PE in a foreign country.
The ruling highlights the importance of understanding the concept of PE, as it can determine whether a company is liable to pay tax in a particular country.
Permanent Establishment refers to the situation where a business has a sufficient physical presence in a foreign country, making it liable to pay tax on its profits in that country.
PE can take many forms, such as having an office, factory, or even just a representative working in a foreign country.
The exact definition of PE can vary from one country to another, but the principle is the same: if a business is operating in a country for a certain period of time, it may be required to pay taxes there.
In this particular case, the CEO of a Swedish company was working part-time in Denmark, raising questions about whether the company had established a PE in Denmark.
The Danish tax authorities argued that the company had a PE in Denmark because the CEO was regularly conducting business activities in the country.
The company, however, claimed that the CEO’s presence in Denmark was not enough to constitute a PE.
The Danish court ultimately ruled that the company did have a PE in Denmark, as the CEO’s work in the country went beyond a mere temporary presence.
This ruling has important implications for businesses with employees who work remotely or travel frequently between countries.
The Danish ruling on Permanent Establishment serves as an important reminder for businesses operating internationally.
Companies need to carefully assess their operations in foreign countries to determine whether they have a PE and may be required to pay tax there.
The rise of remote work and cross-border business activities has made this issue more relevant than ever.
If you have any queries about this article on Denmark Permanent Establishment Rules, or tax matters in Denmark, then please get in touch.
Alternatively, if you are a tax adviser in Denmark and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
Brazil is known for having one of the most complex tax systems in the world, which often poses challenges for businesses trying to operate efficiently.
The country’s VAT system, or Value Added Tax, has been a significant area of concern due to its multilayered structure.
Recognising this, the Brazilian government has introduced new reforms aimed at simplifying VAT compliance and making it easier for businesses to navigate the tax system.
These reforms are intended to enhance Brazil’s competitiveness in the global market by reducing the administrative burden on companies.
VAT is a tax on the value added to goods and services at each stage of the production and distribution process.
In Brazil, VAT is administered at multiple levels—federal, state, and municipal—each imposing different taxes.
This makes compliance difficult and costly for businesses, as they need to keep track of various tax rates, deadlines, and regulations depending on the jurisdiction they operate in.
Brazil’s VAT system includes a combination of taxes, such as:
The multiple layers of taxation often lead to confusion, especially for companies that operate across state lines or provide services in different municipalities.
The complexity also results in frequent disputes between businesses and tax authorities, which can delay business operations and increase costs.
The existing VAT system has long been criticised for being overly complicated and inefficient.
The reform aims to simplify the process by reducing the number of taxes and consolidating the different tax rates into a more uniform structure.
This will not only reduce the administrative burden on businesses but also encourage compliance and reduce the likelihood of tax disputes.
The VAT reform is also seen as crucial to improving Brazil’s standing in the global business community.
As Brazil looks to attract more foreign investment, simplifying the tax system is an important step in making the country more appealing to multinational corporations.
Brazil’s VAT reforms are a welcome development for businesses operating in the country.
By simplifying the tax system, the government hopes to reduce the administrative burden on companies and encourage greater compliance.
These changes are expected to improve Brazil’s competitiveness in the global market, attracting more foreign investment and helping local businesses grow.
If you have any queries about this article on Brazil’s VAT reforms, or tax matters in Brazil, then please get in touch.
Alternatively, if you are a tax adviser in Brazil and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
India is making substantial changes to its transfer pricing rules, with the aim of making its tax system more competitive and easier to navigate for multinational corporations.
These reforms are expected to simplify compliance and attract more foreign investment.
Transfer pricing refers to the rules governing how related companies price goods, services, or intellectual property transferred across borders.
Transfer pricing is the method by which goods, services, or intellectual property are priced when they are transferred between different entities within the same multinational group.
These prices can significantly affect the tax liabilities of companies in different jurisdictions, as shifting profits between countries with different tax rates can lower a company’s overall tax burden.
India has traditionally had a complex and burdensome transfer pricing system, which has led to a high volume of tax disputes between multinational companies and the Indian tax authorities.
The new reforms aim to simplify the system, reducing the risk of disputes and encouraging foreign businesses to invest in India.
The reforms also bring India closer in line with the OECD’s guidelines on transfer pricing, which are used by many countries around the world.
One of the most significant changes is the introduction of bilateral APAs.
This allows companies to agree on transfer pricing rules with the Indian tax authorities in advance, providing more certainty and reducing the likelihood of future disputes.
The reforms also streamline the documentation requirements for businesses, making it easier for them to comply with the rules and avoid penalties.
Clearly, by implementing these changes, India hopes to make the country more attractive for foreign investment.
If you have any queries about this article on transfer pricing, or tax matters in India, then please get in touch.
Alternatively, if you are a tax adviser in India and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
Amazon’s tax practices in the UK have been under the spotlight for many years, with criticism frequently aimed at the tech giant for its minimal corporation tax payments.
In recent years, Amazon paid very little in taxes due to the utilisation of a government tax break, which has now expired.
This development has led to Amazon paying corporation tax for the first time since 2020, marking a significant shift in both the company’s approach to tax and the broader UK tax policy landscape.
Amazon operates globally, with the UK being one of its key markets.
Historically, like many multinational companies, Amazon has faced criticism for taking advantage of legal tax avoidance strategies.
These strategies often involved reporting profits in low-tax jurisdictions such as Luxembourg, while paying relatively little tax in high-tax markets like the UK.
It is claimed that one of the main tools Amazon and other companies had been using in recent years to reduce their UK tax burden had been Rishi Sunak’s much vaunted “Super Deduction”.
The relief allowed for 130% corporation deduction for qualifying expenditure on qualifying plant and machinery in a two year period beginning in April 2021.
This change in Amazon’s tax payments also aligns with a global push for fairer taxation of multinational companies.
The OECD’s Pillar Two reforms, which aim to introduce a global minimum tax rate of 15%, have garnered widespread support.
These reforms are designed to stop companies from shifting profits to low-tax jurisdictions, ensuring that all multinationals, including tech giants like Amazon, contribute a fair share to the countries in which they generate significant revenue.
Amazon’s recent corporation tax payment in the UK is a reflection of both changes in UK tax policy and global efforts to reform corporate taxation.
With governments across the world, including the UK, pushing for greater tax transparency and compliance from large multinationals, we may see further shifts in how companies like Amazon structure their global tax strategies.
If you have any queries about this article on Amazon UK’s corporation tax, or tax matters in the UK, then please get in touch.
Alternatively, if you are a tax adviser in the UK and would be interested in sharing your knowledge and becoming a tax native, there is more information on membership here.
Transfer pricing refers to the rules and methods used to determine the prices of transactions between related companies, such as subsidiaries of a multinational corporation.
When one subsidiary of a company sells goods or services to another subsidiary, the price at which this transaction occurs is called the transfer price.
These rules exist to ensure that companies price these transactions fairly and in line with the arm’s length principle, meaning the prices should be similar to what independent companies would charge each other.
Transfer pricing is important because it affects how much tax a company pays in each country where it operates.
If a company sets its transfer prices too low or too high, it can shift profits from high-tax countries to low-tax countries, reducing its overall tax bill.
This practice can lead to base erosion and profit shifting (BEPS), where countries lose tax revenue because profits are moved to tax havens.
Governments and tax authorities around the world use transfer pricing rules to prevent this type of tax avoidance and ensure that companies pay their fair share of taxes.
Let’s say a multinational company has a subsidiary in Country A, where the tax rate is high, and another subsidiary in Country B, where the tax rate is low.
The company might try to shift its profits to Country B by setting a low transfer price for goods or services sold from the subsidiary in Country A to the subsidiary in Country B.
This would reduce the profits reported in Country A (where the taxes are high) and increase the profits in Country B (where the taxes are low).
To prevent this, tax authorities require companies to set their transfer prices according to the arm’s length principle.
This means that the price should be the same as it would be if the transaction were between unrelated companies, ensuring that each country gets its fair share of tax revenue.
Transfer pricing is a critical aspect of international tax law because it helps prevent companies from shifting profits to low-tax countries.
By ensuring that transactions between related companies are priced fairly, transfer pricing rules help create a more level playing field for businesses and ensure that governments can collect the taxes they are owed.
If you have any queries about this article, or international tax matters more generally, then please get in touch.
Ghana is raising its corporate tax rate as part of its efforts to boost government revenue and address economic challenges.
The corporate tax rate is now set to increase from 25% to 30%, a significant change that will affect both local businesses and multinational companies operating in the country.
In this article, we will discuss why Ghana is making this change, what it means for businesses, and how it fits into the broader economic picture.
Ghana’s economy has been under strain due to several factors, including a global economic slowdown, inflation, and the effects of the COVID-19 pandemic.
To manage its budget and generate more revenue, the Ghanaian government has decided to raise the corporate tax rate.
This is part of a larger strategy to address the country’s growing debt and finance public services, such as infrastructure and healthcare.
The decision to raise corporate tax is a way for the government to increase its tax base, particularly from larger, more profitable companies.
This move comes at a time when many governments around the world are seeking ways to increase revenue in response to rising economic pressures.
The new 30% corporate tax rate is a significant increase from the previous rate of 25%. This means that businesses operating in Ghana will now pay more on their profits.
For local businesses, this could mean tighter profit margins and the need to cut costs elsewhere to maintain profitability.
For multinational companies, this change could affect decisions about where to invest in the region.
Ghana has been an attractive destination for investment due to its relatively low tax rates and stable political environment.
However, with the increase in corporate tax, some businesses might reconsider their investment plans or pass on the higher costs to consumers.
Despite the higher taxes, there are potential benefits to this move. By raising corporate tax, Ghana aims to improve its public finances and reduce its reliance on foreign loans and aid.
This could lead to more stability in the long term and create a stronger business environment.
Additionally, businesses that rely on government services, such as infrastructure and utilities, could see improvements as the extra revenue is invested in public projects.
In the long run, this could benefit businesses by making it easier to operate in Ghana.
Businesses operating in Ghana should review their tax strategies to understand how the higher corporate tax rate will affect their finances.
This might involve adjusting prices, cutting costs, or finding new ways to increase efficiency.
For multinational companies, it’s important to consider how this change fits into the broader regional picture.
Ghana is still an attractive place to invest, but businesses will need to weigh the higher tax rates against other factors like political stability, infrastructure, and access to markets.
Ghana’s decision to raise its corporate tax rate is a significant development that will affect businesses operating in the country.
While it may lead to higher costs in the short term, it is part of a broader strategy to stabilise the economy and improve public services.
For businesses, it’s important to stay informed and adjust their strategies to navigate these changes.
If you have any queries about this article on corporate tax in Ghana, or tax matters in Ghana, then please get in touch.
Alternatively, if you are a tax adviser in Ghana and would be interested in sharing your knowledge and becoming a tax native, then please get in touch. There is more information on membership here.
China’s VAT rebate program is to be expanded to support its export sector.
This is a major policy shift aimed at helping businesses that export goods, especially in light of global economic challenges and reduced demand in some markets.
In this article, we’ll explore what VAT rebates are, why China is expanding this program, and how this could benefit businesses both inside and outside of China.
In many countries, VAT is charged on goods and services as a way to collect tax from consumers. However, when goods are exported, they are often exempt from VAT.
To make sure that exporters aren’t unfairly taxed, governments often offer VAT rebates.
These rebates refund the VAT that was paid when the goods were produced, allowing businesses to recover the tax paid on inputs (like raw materials and manufacturing costs).
For exporters, VAT rebates can significantly reduce costs and increase profits, making their goods more competitive in international markets.
China’s economy has faced several challenges in recent years, including trade tensions, the COVID-19 pandemic, and global inflation.
These factors have put pressure on Chinese exporters, who are struggling with rising production costs and slowing demand from key trading partners.
By expanding its VAT rebate program, China aims to boost its export sector by making it cheaper for companies to produce goods for export.
This policy will give businesses more cash flow by refunding the VAT they paid during production, which could be reinvested into their operations or used to lower prices, making Chinese goods more competitive globally.
While the exact amount of VAT rebates varies depending on the type of goods being exported, the Chinese government has hinted that the rebate program will be expanded to cover a wider range of goods.
This means more industries will benefit from VAT rebates, especially those in manufacturing, electronics, and textiles.
The rebates are likely to be increased to 13%, which is the standard VAT rate in China. This will allow exporters to recover nearly all the VAT they paid when producing goods for international markets.
For Chinese businesses, this expanded VAT rebate program is a lifeline. It will help them reduce costs and make their goods more competitive in global markets, particularly in sectors where price is a key factor in attracting buyers.
The rebates will also boost profitability and give companies more financial flexibility in a challenging economic environment.
For foreign businesses that import goods from China, this could mean lower prices on Chinese-made products, as exporters may pass on some of the savings from the VAT rebates to their customers.
This is especially important for industries like retail and electronics, which rely heavily on Chinese imports.
China’s decision to expand its VAT rebate program is a significant step towards supporting its export-driven economy.
By giving businesses more financial relief, China hopes to keep its goods competitive in the global marketplace, especially in industries that have been hit hard by rising costs and weakening demand.
For exporters, this policy could provide much-needed support as they navigate a complex global economy.
If you have any queries about this article on China’s VAT rebate program, or tax matters in China, then please get in touch.
Alternatively, if you are a tax adviser in China and would be interested in sharing your knowledge and becoming a tax native, then please get in touch. There is more information on membership here.
A non-cooperative tax jurisdiction is a country or territory that does not follow international tax transparency and information-sharing standards.
These jurisdictions often have low or no taxes and strict privacy laws, making them attractive to individuals and businesses looking to avoid or evade taxes in their home countries.
However, because these jurisdictions do not cooperate with international efforts to combat tax avoidance, they are often labelled as “non-cooperative” by organisations like the European Union (EU) and the Organisation for Economic Co-operation and Development (OECD).
Non-cooperative tax jurisdictions make it easier for individuals and businesses to hide their income and assets, reducing the amount of tax revenue that countries can collect.
This can lead to significant losses for governments, which depend on taxes to fund public services like healthcare, education, and infrastructure.
In addition, non-cooperative jurisdictions often allow companies to shift their profits to low-tax or no-tax countries, a practice known as profit shifting.
This deprives the countries where the profits were actually made of tax revenue, contributing to **base erosion**.
The **EU** and the **OECD** maintain lists of non-cooperative tax jurisdictions. These lists are based on criteria like:
Countries that do not meet these criteria may be placed on a black list or grey list of non-cooperative jurisdictions.
Countries and territories on these lists may face penalties or sanctions.
For example, businesses operating in or through non-cooperative jurisdictions may be subject to higher taxes or stricter reporting requirements in other countries.
In some cases, non-cooperative jurisdictions may also face restrictions on accessing international financial markets.
Non-cooperative tax jurisdictions contribute to global tax avoidance and profit shifting, depriving countries of much-needed revenue.
By identifying and penalising these jurisdictions, the EU and OECD aim to create a fairer global tax system where companies and individuals pay their fair share of taxes.
If you have any queries about this article or on international tax matters more generally, then please get in touch.
The ongoing battle over Digital Services Tax (DST) has put Ireland in a tough position.
With the European Union (EU) pushing for a tax on digital services provided by large tech companies, Ireland must decide where it stands—supporting the EU or maintaining strong ties with the United States, home to many of these tech giants.
The US government views these taxes as discriminatory because they primarily target American firms like Google, Facebook, and Amazon.
The DST is a tax levied on the revenues generated by large multinational digital companies that provide services such as social media, online advertising, and e-commerce platforms.
These taxes aim to address the gap where companies generate large revenues from countries where they have no physical presence, meaning they often pay minimal taxes.
The EU has been pushing for a 3% DST across its member states, with many countries already implementing it on a national level.
Ireland, as a key hub for US tech companies in Europe, finds itself at the heart of this debate.
Ireland is home to the European headquarters of major tech companies like Facebook, Google, and Apple (for our recent article on the EU’s ruling on Apple – see here).
These companies have set up in Ireland largely due to the country’s 12.5% corporate tax rate and other favourable tax policies.
The US has raised concerns that the DST unfairly targets American companies and could lead to retaliatory tariffs.
While the EU is keen on creating a unified DST, Ireland is balancing its economic dependence on the US tech sector with its obligations as an EU member.
Ireland’s decision will have significant consequences for its relationship with both the US and its EU partners.
Ireland faces a complex decision in the US-EU DST standoff. Its role as a tech hub makes it crucial to these discussions, and whatever path it chooses will shape its tax landscape for years to come.
If you have any queries about this article on Digital Services Tax, or tax matters in Ireland, then please get in touch.
Alternatively, if you are a tax adviser in Ireland and would be interested in sharing your knowledge and becoming a tax native, then please get in touch. There is more information on membership here.