Important Legislation Changes For Luxembourg And Ukraine

Luxembourg: Increase of VAT rates in 2015

The Government of Luxembourg expressed its intention to carry out a complete tax reform in 2016, expected to be implemented by 2017.

The Government intends to simplify the tax system as well as to improve the income tax indexing mechanism in consultation with social partners, and finally to strengthen legal provisions against value-added tax evasion.

Prime Minister, Xavier Bettel, pointed out that Luxembourg must reduce its expenditure and raise revenue, as public debt currently stands at EUR 11 billion and will rise to EUR 15 billion by 2016 if the Government's fiscal policy remains unchanged.

The Government's decision to raise VAT rates as from January 1st, 2015, will raise income by around EUR 350 million.

From the beginning of 2015, the standard rate of VAT will increase from 15% to 17%, while the reduced rates of 12% and 6% will rise to 14% and 8%, respectively. The "super reduced" rate on basic commodities, such as food, children's clothing, books, and entry tickets to cinemas, theatres, and museums, will remain unchanged at 3%.

The Government further decided that the 3% rate for renovation works carried out on a main residence will remain, but will no longer allow the rate to be applied for works undertaken on a second home.

Even with the raise of the VAT rates in Luxembourg, these will still remain the lowest in the EU.

Ukraine: Changes in tax legislation

On March 31st, 2014, Law of Ukraine "On preventing financial catastrophe and creating grounds for economic growth in Ukraine" No. 1166-VII, came into effect.

The Law proposes fiscal measures for economic recovery and substantial changes to personal and business taxation, in particular:

Corporate income tax rate is fixed at 18% (a decrease to...