LUXEMBOURG
CORPORATE SERVICES
PERSONAL TAX AND SALARY SERVICES
Capital duty was abolished in Luxembourg from 1 January 2009. A fixed registration duty of €75 was introduced and covers several transactions pertaining to Luxembourg companies (financing and participating companies (SoParFis and SICARs), specialised investment funds (SIFs), securitisation vehicles and investment vehicles for private individuals (SPFs)), including incorporation, transfer of registered office from a foreign country to Luxembourg and amendment of the byelaws.
Contributions in kind consisting of the transfer of real estate into a company is subject to a specific registration tax as follows: the contribution of real estate, located in the Grand Duchy of Luxembourg, to a civil or commercial company remunerated by shares is subject to 0.6% registration duty + 0.5% transcription tax; the contribution of real estate, located in the Grand Duchy of Luxembourg, to a civil or commercial company remunerated by means other than shares is subject to 6% registration duty + a percentage for transcription tax (4% for Luxembourg City).
However, transfers made in the context of a corporate restructuring (ie contributions of all assets and liabilities, contributions of one or more branches of activities as well as contributions of all assets and liabilities of a 100% held subsidiary) are exempt from proportional duties under the condition that the transfers have been mainly remunerated (ie with more than 50%) with securities that represent share capital of the companies involved.
The abolition of capital registration duty has also led to the abolition of the clawback rule which required the maintenance of at least 65% of the shares transferred for a period of five years in order to benefit from the capital registration duty exemption.
Prior to 1 January 2009, capital duty of 0.5% applied to the amount of the subscribed capital and share premium of a Luxembourg company on incorporation and on subsequent share capital increases (including loan capital deemed to be share capital because of the absence of loan characteristics). Capital duty also applied to the capital of a Luxembourg branch of a foreign company. The following items were exempt from this duty:
• capitalisation of reserves
• an EU company’s contribution of a division or all of its activities to a Luxembourg company, and
• contribution of at least 65% of the share capital of an EU company by a Luxembourg limited liability company, provided the Luxembourg limited liability company held 65% in the subsidiary for at least five years.