Tax relief for global investment
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A business which makes investments during the course of an operating year may qualify for a 12 % tax relief for global investment.
The tax relief for global investment is granted upon application by the business concerned. That application is made at the time of filing the income tax return, on the basis of a form made available by the Luxembourg Inland Revenue (Administration des contributions directes).
A new form devised by the Luxembourg Inland Revenue to apply for an investment tax relief will be made available in due course for the purposes of filing the income tax return for the 2024 operating year.
Who is concerned
Eligible businesses
The tax relief for global investment is intended for commercial, industrial, mining or craft businesses within the meaning of Article 14 L.I.R.
Prerequisites
The investments must be made in an establishment located in Luxembourg which is intended to remain there permanently. In addition, the investments must be physically implemented on the territory of the Grand Duchy of Luxembourg or on the territory of another State which is a party to the Agreement on the European Economic Area.
Eligible costs
The tax relief for global investment covers only the following investments:
- investments in depreciable tangible assets other than buildings, agricultural livestock and mineral and fossil deposits;
- investments in sanitary and central heating installations incorporated in hotel buildings. However, only that part of the installations which relates to premises normally serving as hotel rooms and related premises is taken into consideration. A Grand-Ducal Regulation may be enacted:
- specifying the related premises;
- laying down a minimum of sanitary installations for hotel rooms;
- establishing a concise flat-rate system for determining that part of the installations which relates to hotel rooms and related premises;
- investments in buildings as referred to in Article 1 of the Grand Ducal decree of 30 July 1960 defining investments of a social nature qualifying for tax aid for new investments;
- investments in fixed assets approved as qualifying for the special depreciation provided for by Article 32bis L.I.R.;
- acquisitions of software, in so far as the software in question has not been acquired from a related company within the meaning of Article 56 L.I.R..
The following are, however, excluded:
- assets depreciable over a period of less than 3 years;
- assets acquired by way of wholesale integration of a business, an autonomous part of a business or a fraction of a business;
- second-hand assets acquired otherwise than by one of the operations referred to in the immediately preceding point;
- motor vehicles, except:
- those assigned exclusively to a business engaging in the transportation of persons or forming part of the net invested assets of a car rental company;
- those assigned exclusively to the transportation of goods or merchandise;
- those assigned exclusively within a business to the transportation of employees to or from their place of work, provided that such vehicles are approved for travel on the public highway and have a capacity of at least 9 occupants (including the driver);
- those specially fitted out exclusively for use as a breakdown/repair service;
- self-propelled machinery;
- automobiles for the carriage of persons, other than a tricycle or quadricycle, with zero emissions, running exclusively on electricity or exclusively on a hydrogen fuel cell, the interior of which is adapted exclusively for the transportation of persons and contains not more than 9 seats, including the driver's seat, classed as an M1 vehicle, first registered after 31 December 2017, up to the first tranche of EUR 50,000 of the purchase price per vehicle;
- purchases of software forming the subject of the certificate for a relief for investment in a digital transformation project or an ecological and energy transition project.
However, second-hand assets are eligible for the investment tax relief up to an amount of EUR 250,000 where they are invested by the taxpayer in the context of a start-up.
How to proceed
The tax relief for global investment is calculated on the purchase price or the cost price of the investments made over the course of an operating year.
The rate of the tax relief for global investment amounts to 12 %. For the purchase of software, the tax relief rate likewise amounts to 12 %, subject however to the restriction that the tax relief for the acquisition of software may not exceed 10 % of the tax due for the tax year in the course of which the financial year during which the software was purchased is closed. In the case of investments in fixed assets approved as qualifying for special depreciation (as referred to in Article 32bis L.I.R.), the rate of the tax relief increases from 12 % to 14 %.
The tax relief for global investment gives rise to a deduction of the amount of income tax payable for the tax year in the course of which the operating year during which the investments were made is closed. Should the level of tax be too low, the unused tax relief, except for the part corresponding to the tax relief for the purchase of software, can be deducted from the tax payable in respect of the next 10 fiscal years.
The investment tax relief is granted upon application by the business concerned. That application is made at the time of filing the income tax return, on the basis of a specific form made available by the ACD.
Who to contact
Luxembourg Inland Revenue (ACD)
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Luxembourg Inland Revenue (ACD)
- Address:
- 33, rue de Gasperich L-5826 Hesperange Luxembourg
Please consult the above website to find the competent department.
