Luxembourg

Guidance in the implementation of Pillar Two minimum taxation rules in Luxembourg

Pillar Two legislation was enacted in Luxembourg on 22 December 2023.

The Income Inclusion Rule (IIR) and the Qualified Domestic Minimum Top-up Tax (QDMTT) are effective for fiscal years starting on or after 31 December 2023, whereas the Undertaxed Profits Rule (UTPR) would become effective for fiscal years starting on or after 31 December 2024.

The text of the law strictly adheres to the text of the European Union (EU) Pillar Two Directive, with some additions introduced to reflect parts of the Organisation for Economic Co-operation and Development (OECD) Administrative Guidance released in February 2023 and July 2023.

On 19 December 2024, the Pillar Two Law was amended with the aim to reflect additional parts of the OECD Administrative Guidance of February 2023 and July 2023, as well the OECD Administrative Guidance of 19 December 2023.

Further amendments may be expected in the future to reflect (parts of) the OECD Administrative Guidance that has so far not been included in the law.