Luxembourg: Domestic Corporate Taxation
In Luxembourg there are three main taxes impinging on businesses: Corporate Income Tax, the Municipal Business Tax on Profits, and the Fortune Tax (a wealth tax). Of course there is also VAT, and there are withholding taxes.
Presenting the government's budget for 2010, Finance minister Luc Frieden categorically ruled out any increases or reductions in taxes for companies or individuals for the following year, adamant that there was no scope to implement tax cuts, and that any rise in taxes would merely prove damaging to the economy.
Then, in April 2010, Frieden unveiled details of the government’s ambitious proposals to reduce spending and to increase tax revenue, in a bid to achieve a balanced budget by 2014, and to maintain public debt at a manageable level.
From January 2011, a ceiling of EUR300,000 was imposed for severance pay and 'golden' handshakes to limit the impact of severance pay on the corporation's taxable base, employment fund contributions were raised by 1% to 5%.