It is already December? Yes, it is! But before thinking about Santa Claus and your skiing vacation, you should look into the tax matters of your LuxCo as soon as possible, so you can start 2016 smoothly. You still have a good chance of straightening things out by 31 December if you act now!
Here are three smart moves you can take in the world of taxes:
1. Check your wealth tax basis
Your company should be subject to wealth tax which will be levied at 0.5% of its net assets as of 1 January (valuation day). To benefit from the various exemptions available, you should ensure that you satisfy the relevant requirements by 31 December. You should not wait until the preparation of the net wealth tax return next year—rather, check your wealth tax basis now while you still have time to fix any problems. Taking things as they come is definitely not the best approach.
2. Estimate your taxes
Estimating your taxes is wise for several reasons: to get an idea of how much you’ll need to set aside for next year, to verify whether your advance payments are still reasonable or could be adjusted, and also to properly close tax expense accounts which should be among the last accounts closed prior to finalisation of your financial statements. Keep in mind that you’ll most likely have to pay tax even if you’re in a loss position or if you have tax-exempt income only—and statutory minimum income taxes range from €535 to €21,400 for 2015. There is no escape from heavy tax charges as soon as the ball drops on New Year’s Eve.
3. Perform an overall tax health check
There is no better time for a general assessment of your overall tax situation and for future planning than year-end. It’s worth addressing questions like:
- Do you have adequate substance in Luxembourg?
- Is your investment structure still tax efficient?
- Do you expect investment income to rise anytime soon and will you benefit from tax exemptions?
- Have you submitted tax group and functional currency requests?
- Are you observing the various tax filing requirements?
- Is your transfer pricing policy robust enough?
An overall health check now could help you reduce the taxes you’ll owe. Thus, the time you invest in planning is well worth it.
Looking for more information?
We can tailor an individual plan to review and assess the structuring opportunities that are available to you. You will have many more options on the table if you assess matters now rather than waiting until next year. If you’d like to know more about tax or want to have a chat on other financial matters, please feel free to contact us and visit our website.