Richard Cornelisse

Luxembourg Below Tax Budget

In Tax News on 10/05/2012 at 3:18 pm
Quarter 1, 2012 By Luxembourg’s Finance Minister Luc Frieden
  1. Total fiscal revenues fell 5% in the first three months of the year, compared to the same period in 2011. However, taking into consideration certain exceptional circumstances, revenues stood at about the same level as last year, the minister added.
  2. Corporate tax revenues fell 47% (-EUR252m or -USD328m) between 2012 and 2011 (January to March), this recorded drop is attributable to a one-off significant payment from a company in Luxembourg in the first quarter of 2011. Without this anomaly, corporate tax revenues would have stagnated.
  3. Income derived from the tax imposed on salaries and wages rose in line with the budgetary forecast from quarter one 2011 to the same quarter this year.
  4. A 6% rise in revenues from value-added tax (VAT). The increase is primarily due to higher revenues from electronic commerce, which made up 25% of all VAT revenues in the first quarter of 2012. These revenues “are not sustainable”, as income from electronic commerce is expected to gradually disappear from 2015, when the reverse charging regime on purchases of goods and services electronically within the European Union (EU) begins. The regime change will lead to a predicted shortfall of VAT revenues for the state of around EUR600m in 2015.

Read more:  Tax-News.com – Luxembourg Unveils Unsatisfactory Q1 Tax Revenues by Ulrika Lomas

Example Of E-commerce And The Temporary Cause Effect Of VAT Revenue Increase

As resident of Europe an private individual if you buy services from Apple via the iTunes store no local VAT is due unless you are a resident of Luxembourg.

The supply is subject to Luxembourg VAT. In Hungary the standard VAT rate is 27%.

The standard VAT rate in Luxembourg is still 15%. That means at least a VAT saving of 12% per transaction.

Read more about the possibilities and conditions in “VAT Rate Increase Results In Extra Saving

Richard Cornelisse is CEO of the KEY Group and worked previously as Big4 Partner in the Tax Performance Advisory and Indirect Tax Practice and blogs on Tax Function Effectiveness and Tax Control Framework developments.

Tax Management Consultancy welcomes your opinion on any of the issues raised, so feel free to join in the discussion on LinkedIn | Twitter | Facebook.

  1. […] Luxembourg Below Tax Budget. Share this:TwitterFacebookLike this:LikeBe the first to like this post. Category : […]

  2. […] and conditions in the blogs “VAT Rate Increase Results In Extra Saving“, “Luxembourg Below Tax Budget” and “The Reputation Of A Tax […]

  3. […] the possibilities and conditions in the blogs “VAT Rate Increase Results In Extra Saving“, “Luxembourg Below Tax Budget” and “The Reputation Of A Tax […]

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