Tax consolidation (29/05/2008)
Thanks to the this regime, an investment company based in Luxembourg can create with its Luxembourg subsidiaries a "group" of which the taxable basis represents the sum of the fiscal results realized/accomplished by each company.Article
Article 164 of the Law of the income tax (LIR).
Purpose
Compensation of the loss suffered by a company of the group by the profit of another company of the group.
Conditions
The consolidated companies have to be fully taxable resident capital companies.
- A direct or indirect holding (transparent company) of minimum 95 % of the capital;
- Companies must have the same dates as the opening and the closing of their accounting financial years;
- The regime is applying for an initial minimal period of five financial years;
- A written request has to be applied to the administration which will give its written consent. The request has to be signed by all the companies of the group and applied to the taxation authorities of the mother company. It is recommended to send a copy of the request to the other taxation authorities of the companies of the group.
Remark
This regime is only valid for the corporate income tax and the commercial income tax. It is not valid for the fortune tax.
In practice
- Each company must always file an individual tax statement to the tax administration.
- The mother company must (besides its own tax statement) filet a statement in which the results of the companies of the group are consolidated.
Carried forward loss
- The loss previous to the group's incorporation cannot be used in the consolidation.
Example of calculation of the consolidated result
Two capital companies are fiscally integrated from 1st January 2007. On 31/12/2006, the company B benefits from a fiscal loss carry-forward of 300 000,00 EUR.
|
Loss carried forward before the consolidation |
Fiscal result of the first year of the consolidation (2007) |
Fiscal result of the second year of consolidation (2008) | |
| Company A | 0,00 | 100 000,00 | 500 000,00 |
| Company B | (300 000,00) | (80 000,00) | 250 000,00 |
Consolidated result of the first year
(A 100 000,00 - B 80 000,00) = 20 000,00 EUR
Consolidated result of the second year
(A 500 000,00 + B*0,00) = 500 000,00 EUR
*The company B suffers a carried forward loss of 300 000,00 EUR in 2006.
This loss has been carried before the fiscal incorporation and is therefore only compensable with the "individual" results of the company B.
In 2007, the company B suffers a loss, so it cannot compensate the loss of 2006. But, in 2008, the company B will be able to compensate its 250 000,00 EUR of profit by the previous loss:
- 250 000,00 – 300 000,00 limited to the profit, namely 250 000,00 = 0,00
- 50 000 EUR will be able to be carried forward to the future individual results.
-
The fiduciary agreement
The fiduciary agreement enables the transfer of the legal ownership of goods by creating a "patrimoine d'affectation” separated from the personal estate... -
The European Economic Interest Grouping
The European Economic Interest Grouping (“EEIG”) and the Economic Interest Grouping (“EIG”) have similar features exception made of the European residency... -
Luxembourg and microfinance
A new step forward which reinforces the attractiveness of Luxembourg as a hub for microfinance.The Luxembourg government has just passed a "Règlement... -
FIDOMES is Looking for New Collaborators
Manager Corporate & Trust Department Director Tax Department Experienced Legal Counsel Funds (m/f) Experience Web & Print Designer... -
IPR in Luxembourg: tax exemption
The tax attractiveness of Luxembourg regarding the intellectual property has increased by the introduction of a tax optimisation regime for the use... -
Islamic Finance in Luxembourg
As a leading financial place in Europe, Luxembourg is the 1st non Muslim place for the domiciliation of Shariah compliant funds in 2009.The Grand Duchy... -
Rental office in VEGA Center
Offices to rent in the Vega Business Center In Capellen - motorway from Luxembourg to Arlon exit n°2 10 minutes from Luxembourg-city Surfaces...
More news
NEWS
© FIDOMES S.A. - 2010
