Tax relief for investment in an ecological and energy transition project
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A business engaging in an ecological and energy transition project may qualify for a tax relief. That tax relief is calculated on the amount(s) invested and the operating costs incurred, in the context of an ecological and energy transition project. The tax relief rate amounts to 18 % for the investments and operating expenses, apart from depreciable tangible investments. The rate applicable to the latter amounts to 6 %, in addition to the 12 % rate applicable to the tax relief for global investment. It follows that depreciable tangible investments likewise qualify for a rate of 18 %.
In order to claim such a tax relief, the business in question must submit, together with its income tax return, a certificate issued by the Minister of the Economy attesting to the fact of the investments and operating expenses having been actually made/incurred during the course of a given operating year (applicable for the first time for the 2024 operating year).
Who is concerned
Eligible businesses
This fiscal measure is intended for commercial, industrial, mining or craft businesses within the meaning of Article 14 L.I.R.
Prerequisites
The investments must be made, and the operating expenses incurred, 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.
In that regard, the investments and operating expenses must be made/incurred on account of an ecological and energy transition project undertaken by the business in question. The duration of such a project may not exceed 3 consecutive operating years.
The ecological and energy transition is defined as 'any change reducing the environmental impact, in the production or consumption of energy or the use of resources; the change in question must be significant and technical or material in nature. The following are excluded from this definition: ceasing to use a process, simple capital replacement or extension, changes resulting purely from changes in factor prices, regular seasonal and other cyclical changes, as well as trading of new or significantly improved products.'
Eligible costs
The tax relief covers only the following investments and operating expenses inherent in ecological and energy transition:
- investments in depreciable tangible assets other than buildings, agricultural livestock and mineral and fossil deposits;
- investments in software or in patents other than those acquired from a related company within the meaning of Article 56;
- expenses incurred for the use of, or the right to use, patents or software other than those granted by a related company within the meaning of Article 56;
- expenses in respect of consultancy services, diagnostic services and technical support services provided by external service providers which are not related to the normal operating expenses of the business, such as regular tax advice or legal advice, or advertising;
- expenses in respect of staff directly assigned to work on the digital transformation or the ecological and energy transition of the business;
- expenses in relation to training for staff directly assigned to work on the digital transformation or the ecological and energy transition of the business.
Conditions - Objectives to be achieved
The investments made, and operating expenses incurred, in the context of an ecological and energy transition project must satisfy one of the following objectives:
- significantly improve the energy efficiency of a production process of the business in such a way as to achieve a saving of at least 20 % of the amount of energy used, determined by reference to the average energy performance of the process in question over a reference period comprising the 5 operating years preceding the one during which the ecological and energy transition begins;
- significantly decarbonise a production process of the business in such a way as to achieve a reduction of at least 40 % in greenhouse gas emissions, determined by reference to the average emissions produced by the process in question over a reference period comprising the 5 operating years preceding the one during which the ecological and energy transition begins;
- produce or store the energy produced from renewable non-fossil sources in such a way as to meet the energy needs of the business by self-sufficient means. The term 'energy produced from renewable non-fossil sources' means wind energy, solar energy (thermal and photovoltaic), geothermal energy, ambient energy, tide, wave and other ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas, biogas and renewable hydrogen and its renewable by-products;
- reduce the air pollution deriving from the production site of the business below the pollutant emission limits laid down by the Grand Ducal regulation of 27 June 2018 on the reduction of national emissions of certain atmospheric pollutants and the Grand Ducal regulation of 30 May 2005, as amended, applying Directive 2004/107/EC of the European Parliament and of the Council of 15 December 2004 relating to arsenic, cadmium, mercury, nickel and polycyclic aromatic hydrocarbons in ambient air. The potential reduction in emissions from economic activity is determined by reference to the average emissions from the production site in question over a reference period comprising the 5 operating years preceding the one during which the ecological and energy transition begins;
- significantly improve the efficiency, in terms of materials, of a production process of the business in such a way as to reduce the use of primary raw materials by at least 15 %, or replace the primary raw materials to the tune of at least 20 % by substituting by-products or secondary raw materials in their place. The improved efficiency in terms of materials is determined by reference to the average consumption of primary raw materials by the process in question over a reference period comprising the 5 last operating years immediately preceding the one during which the ecological and energy transition begins;
- implement a production process which makes it possible to extend the useful life of products by re-using them.
How to proceed
The income tax relief for investments made, and operating expenses incurred, in the context of an ecological and energy transition project 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 or operating expenses were made/incurred is closed. Should the level of tax be too low, the unused tax relief can be deducted from the tax payable in respect of the next 10 fiscal years.
The tax relief for investments is calculated on the purchase price or the cost price of the investments made over the course of the operating year in question. The tax relief for operating expenses is calculated on the deductible operating expenses for the operating year.
System for attestation of eligibility and certification
In order to claim a tax relief for an ecological and energy transition project, the business in question must submit, together with its income tax return, a certificate attesting to the fact of the investments and operating expenses having been actually made/incurred during the course of a given operating year, as well as the amount thereof.
However, the grant of such a certificate is conditional on obtaining an 'attestation of eligibility' issued by the Ministry of the Economy.
Application for an 'attestation of eligibility'
The application for an attestation of eligibility is to be submitted to the Ministry of the Economy, using a specific form. The application can also be submitted via MyGuichet.lu or the MyGuichet.lu mobile app. This is a procedure requiring authentication.
Application processing time
The ministerial decision granting or refusing the attestation of eligibility is issued as quickly as possible, and in any event within 3 months from the date of receipt of a properly completed application.
Application for a 'certificate'
For each operating year in respect of which investments and/or operating expenses have been made/incurred, a certificate is issued by the Ministry of the Economy upon application by the business concerned. The application for the certificate is to be submitted to the Ministry of the Economy.
On risk of forfeiture, the application, accompanied by supporting documents, must be lodged by no later than 2 months after the close of the operating year during which the investments and/or operating expenses were made/incurred.
Following scrutiny of the application, the Ministry issues the certificate as quickly as possible and by no later than 9 months after the close of the operating year during which the investments and/or operating expenses were made/incurred.
Only investments and operating expenses which are made/incurred following submission of the application for the attestation of eligibility may form the subject-matter of the certificate.
Online services and forms
Who to contact
-
Ministry of the Economy Ministry of the Economy - tax relief certificates
- Address:
- 19-21, boulevard Royal L-2449 Luxembourg Luxembourg
- Phone:
- (+352) 2478-2478
- Fax:
- (+352) 46 04 48
- Email address:
- bonification@eco.etat.lu
- Website:
- https://meco.gouvernement.lu/fr.html
Related procedures and links
Procedures
Links
Further information
Legal references
-
Loi modifiée du 4 décembre 1967
concernant l'impôt sur le revenu
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Règlement grand-ducal du 27 août 2024
relatif au certificat à joindre à la déclaration d’impôt sur le revenu prévu à l’article 152bis, paragraphe 6, de la loi modifiée du 4 décembre 1967 concernant l’impôt sur le revenu
-
Règlement grand-ducal du 27 août 2024
modifiant le règlement grand-ducal du 29 octobre 1987 portant exécution de l’article 152bis, paragraphe 10 de la loi du 4 décembre 1967 concernant l’impôt sur le revenu
