Aurore Calvi

Managing Director, OmniTrust, Luxembourg

www.omnitrust.lu

Aurore Calvi is the Managing Director of OmniTrust. With a distinguished career spanning over 25 years in a Big Four accounting firm and various fiduciary organisations, she has held the position of CFO at Capita Assets Services/Link starting in 2009 and became a CSSF-authorised director in 2015, a role she fulfilled until her departure in late 2018. In 2019, she founded OmniGroup. Since 2022, she has been a board member of the Order of Chartered Accountants of Luxembourg, representing small and medium-sized firms within the profession at the board level.

Luxembourg’s 2024 investment tax rebates

June 1, 2024

Luxembourg’s 2024 investment tax rebates are set for significant changes following the recent passage of Bill No. 8276 by the Chamber of Deputies. This bill aims to reform Article 152bis of the Income Tax Law (LIR), focusing on tax rebates for investments. The new regime, effective from the 2024 tax year, introduces substantial benefits for companies investing in digital transformation and ecological and energy transition projects.

A reminder of Luxembourg’s 2023 investment tax regime

Under the existing Article 152a LIR, commercial, industrial, mining, or craft enterprises in Luxembourg can apply for an investment tax credit. This incentive comprises two parts:

Complementary investment credit

Provides a 13% tax credit on additional investments in tangible depreciable assets, excluding buildings, agricultural livestock, and mineral deposits.
The additional investment value is calculated by deducting the reference value (an average of the last five years’ property values) from the current year’s property value.
Certain assets, such as those depreciable over less than three years, used goods, and specific motor vehicles, are excluded.

Overall investment credit

Grants an 8% tax credit on the first €150,000 of eligible investments and a 2% credit on amounts exceeding €150,000.
Eligible investments include tangible depreciable assets, sanitary and heating installations in hotels, and investments in social buildings.
For software acquisitions, the credit is 8% for investments up to €150,000 and 2% for amounts above this threshold, capped at 10% of the tax due.

New regime for 2024 onwards

The 2024 reform abolishes the additional investment tax rebate and adjusts the overall investment tax credit as follows:

Global investment credit

The basic tax credit rate for global investments in depreciable tangible assets increases from 8% to 12%.
The €150,000 investment tranche condition is removed.
For investments eligible for special depreciation under Article 32bis LIR, the credit rate increases to 14%.

Digital transformation and ecological transition projects

Investments and expenses related to digital transformation or ecological and energy transition projects are eligible for an 18% tax credit.
Investments in tangible depreciable assets as part of these projects receive an additional 6% credit, totalling an 18% rebate.

Definitions

Digital Transformation: Implementing new or significantly improved production or distribution methods using digital technologies.

Process Innovation: Significant changes in production or distribution methods excluding minor improvements or capacity increases.

Organisational Innovation: Implementing new organisational methods or improving company relations, excluding minor procedural changes.

Circular Economy: Maximising the value and use of resources to reduce environmental impact and waste.

Ecological and Energy Transition: Significant technical changes reducing environmental impact in energy production and resource use.

Conditions and procedures

Eligible investments and expenses include:

Tangible depreciable assets (excluding buildings, livestock, and mineral deposits).
Software and patents (excluding those from related companies).
Consulting, diagnostic, and technical support services.
Personnel and training expenses directly related to digital or ecological transitions.

The process to claim these rebates involves obtaining eligibility and compliance certificates from the Minister of the Economy, and verifying the investments and expenses made.