Circular from Luxembourg Tax Administration: fiscal treatment of simplified liquidation or dissolution without liquidation
In their Circular issued on 19 July 2024 (reference L.I.R. n° 170/1, 170bis/1, I.C.C. n° 44, I.Fort. n° 55), the Luxembourg Tax Authorities provide a clarification regarding the tax treatment of simplified liquidation or dissolution without liquidation, as stated in Article 1865bis of the Civil Code.
Key Points:
◻ Corporate Income Tax (CIT): A dissolution without liquidation under Article 1865bis, which involves the transfer of all company assets to a single shareholder without liquidation, is considered a transfer of social assets normally subject to tax under art. 169 LIR. This can potentially be assimilated to a merger and conducted with tax neutrality, exempting the realised gain from taxation if certain conditions are met. This includes transactions within the EU and EEA, also subject to specific criteria.
◻ Business Tax (MBT): The Luxembourg Tax Authorities confirm that, following the principles of IRC, tax profits arising from the universal transfer of assets without liquidation are not subject to MBT.
◻ Net Wealth Tax (NWT): In case of dissolution without liquidation, the NWT reserve can be continued at the level of the receiving entity, ensuring compliance with the minimum holding period requirement. Conversely, in the case of a dissolution with liquidation, If the 5-years minimum holding period is not met at the time of the liquidation, the NWT will be due by the liquated company.
Read the Circular here : https://lnkd.in/dg2ZvdTW
Value Partners has specialised teams providing comprehensive support for liquidation and tax-related matters. If you require expert advice and assistance, please contact Alessandro Bertonazzi and Mathieu Ledoux.
Circular from Luxembourg Tax Administration: fiscal treatment of simplified liquidation or dissolution without liquidation
In their Circular issued on 19 July 2024 (reference L.I.R. n° 170/1, 170bis/1, I.C.C. n° 44, I.Fort. n° 55), the Luxembourg Tax Authorities provide a clarification regarding the tax treatment of simplified liquidation or dissolution without liquidation, as stated in Article 1865bis of the Civil Code.
Key Points:
◻ Corporate Income Tax (CIT): A dissolution without liquidation under Article 1865bis, which involves the transfer of all company assets to a single shareholder without liquidation, is considered a transfer of social assets normally subject to tax under art. 169 LIR. This can potentially be assimilated to a merger and conducted with tax neutrality, exempting the realised gain from taxation if certain conditions are met. This includes transactions within the EU and EEA, also subject to specific criteria.
◻ Business Tax (MBT): The Luxembourg Tax Authorities confirm that, following the principles of IRC, tax profits arising from the universal transfer of assets without liquidation are not subject to MBT.
◻ Net Wealth Tax (NWT): In case of dissolution without liquidation, the NWT reserve can be continued at the level of the receiving entity, ensuring compliance with the minimum holding period requirement. Conversely, in the case of a dissolution with liquidation, If the 5-years minimum holding period is not met at the time of the liquidation, the NWT will be due by the liquated company.
Read the Circular here : https://lnkd.in/dg2ZvdTW
Value Partners has specialised teams providing comprehensive support for liquidation and tax-related matters. If you require expert advice and assistance, please contact Alessandro Bertonazzi and Mathieu Ledoux.