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18-03-2020

The Luxembourg government announces measures to support taxpayers during the Covid-19 pandemic

On 17 March 2020, the Luxembourg Government announced a series of measures aimed to guarantee the continuity of the Luxembourg economy during the lockdown due to the spread of the Covid-19.

In order to deal with liquidity problems due to the Covid-19 pandemic, corporate and individual taxpayers who carry out a commercial activity, an agricultural / forestry activity or the exercise of an independent profession may request:

  • the cancellation of quarterly advances of income tax  and municipal business tax for the 1st and 2nd quarter of 2020 (a specific form is available for that purpose: modèle annulation avances);
  • an extension to the payment deadline for income tax, municipal business tax and net wealth tax (a specific form is available for that purpose: modèle délai de paiement).

Note that these requests are considered as automatically accepted by the administration.

In addition, the deadline for submitting both corporate and individual tax returns has been extended to 30 June 20201.

Further, this extension is also applicable to taxpayers wishing to request, modify or revoke their choice of individual taxation (i.e., married couple taxation vs individual taxation).

Additional information and clarifications have been provided through Frequently Asked Questions (FAQ). See below a summary of the relevant information:

  • The submission of the requests above to the Luxembourg Tax Administration is quite simple; taxpayers only have to complete the form, sign it and send it by post or email to the appropriate taxing office.
  • The payment of withholding tax on wages is excluded from the extension of payment deadline.
  • The extension of payment deadline is not applicable to taxes that were due before 1st March 2020 (the payment deadline for the 1st quarterly advance is due after 1st March).
  • The request for cancellation of taxes is not applicable to net wealth tax advances; only income tax and municipal business tax advances can be canceled.
  • Taxpayers have the option to request the cancellation of the advance payment concerning one or both of the first two quarters of 2020.
  • It is possible to request the reduction of advance payments to a certain amount, i.e., without canceling them; for that purpose, the taxpayer has to deliver a letter to the competent taxing office including the proposed reduced amounts and the reasons of the request.

1 | In principle, the deadline for filing individual tax returns is 31st March of the year following the year to be declared; the deadline for filing corporate tax returns is 31st May of the year following the year to be declared.

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