Luxembourg has declared the wealth tax unconstitutional

27.11.2023 The Constitutional Court of Luxembourg, in its decision of November 10, 2023, ruled that the wealth tax regime applied to enterprises contradicts the constitutional principle of equality before the law.

Based on Section 8(2)(a) of the Wealth Tax Act of October 16, 1934, enterprises with qualified assets and financial assets (i.e. fixed financial assets, transferable securities and cash in the bank) exceed 90% of the total balance or the amount of 350,000 euros are taxed in the minimum amount of 4,815 euros.

The Constitutional Court ruled that this provision violates the constitutional principle of equality, and the threshold of 350,000 euros has no rational justification. The court argued that taxpayers with a different balance sheet structure are not charged this tax, although the final indicator of their balance sheet may be in the same range as those who pay the wealth tax. Thus, prior to this court decision, the priority was not the size of the company's assets, but what assets the company owns.

In addition, the court decided that the minimum tax in this case should be no more than 1,605 euros, instead of 4,815 euros.

The decision of the Constitutional Court concerns only those taxpayers whose total balance is from 350,000 to 2,000,000 euros, and qualified assets and financial assets exceed 90% of the total balance. For such taxpayers, before the amendments to the wealth tax law are introduced, the minimum tax will be 1,605 euros, not 4,815 euros.
Further reform of the law is planned.

Link to source: https://legilux.public.lu/eli/etat/leg/acc/2023/11/10/a745/jo