Payment institutions (PIs) and electronic money institutions (EMIs) operate in one of the fastest-moving parts of financial services. But with this pace, and as institutions look to scale, there is increasing tax operational and regulatory complexity, across corporate tax, VAT, transfer pricing, reporting and governance.
The upside? Luxembourg offers powerful incentives for digital and IP-driven business models. Here, we explain how to leverage this and turn compliance into advantage.
The tax obligations on PIs and EMIs are varied and complex. For example, did you know that…
However, notwithstanding the challenges, did you also know that Luxembourg offers highly attractive tax incentives for innovative, IP‑driven businesses – such as the intellectual property (IP) regime and investment tax credits for digital transformation?
As part of the Luxembourg IP regime, a Luxembourg company can benefit from an 80% tax exemption on income and capital gains derived from eligible intellectual property assets such as software or patents. Such IP assets must have been developed or improved after 31 December 2007 as part of research and development activities performed by the Luxembourg company. For technology-led PIs/EMIs, this can materially reduce the effective tax rate on eligible, value-creating assets. We can help you assess eligibility, ring-fence qualifying income and set up robust tracking.
Luxembourg’s Investment Tax Credit for digital transformation – and, where relevant, eco‑transition – covers eligible investments and qualifying operating expenses tied to digital and ecological/energy transition projects, offering a credit of up to 18% that directly reduces a company’s corporate income tax liability. We can guide you from eligibility scoping and certification to claiming and audit readiness.
Managed correctly and taking advantage of available incentives, tax governance is more than compliance: it mitigates risk, enhances efficiency and enables your strategic growth. A robust tax governance framework brings structure, ownership and transparency to how taxes are managed – reducing risk, supporting better decisions and giving boards, investors and regulators confidence that tax is handled as a strategic, well-governed function.
At KPMG, our technology-enabled approach consolidates tax-related data, deadlines and processes into a single real-time dashboard, so you can monitor obligations, manage risk and streamline collaboration across Finance, Tax and Compliance.
Role-aware workflows orchestrate tasks (e.g. corporate tax return steps, approvals and document packs), track progress and audit trails, and surface what’s due this week or overdue, reducing manual follow-ups and improving accountability.
For PIs and EMIs this brings the following advantages:
By harnessing technology to increase automation and always-on control, KPMG can help you manage tax governance and compliance in a way that is both practical and value-adding, including:
If you’re building a scalable payment or e-money platform, now is the time to upgrade tax from “necessary” to “advantage.”
KPMG Luxembourg’s Financial Services Tax team helps you:
