OECD

Luxembourg is one of six countries that are most competitive in terms of taxes among the world’s 38 most developed economies, according to the latest International Tax Competitiveness Index. 

While this might seem to lend ammunition to those who criticise Luxembourg as a tax haven, the picture painted in the report is somewhat nuanced. For example, it also ranks fellow cross-border business hub Ireland as 35^th out of the 38 OECD member states.

The world economy is slowing down at a faster pace than expected as a result of the consequences of Russia’s war against Ukraine, the Organisation for Economic Cooperation and Development, or OECD, said on Monday. Further interest rate increases are needed in most major economies to halt inflation, it said.

For a country that is well established as a global leader in investment funds, one might expect its people to embrace more risk when it comes to their financial investments. As it turns out, the love for cash deposits is as big as ever.

The new corporate taxation rules from the Organisation for Economic Co-operation and Development (OECD) join earlier reforms that collectively pose economic and fiscal risks to the Luxembourg economy, according to the International Monetary Fund (IMF). Tax experts say it is possible that some non-financial multinationals located here might decide to leave because of the new OECD rules.

Luxembourg business representatives have said that the OECD’s Inclusive Framework Pillar One and Two corporate income tax proposals contain risks of excessive complexity, could put state tax authorities under pressure, increase the likelihood of litigation and could put competitiveness at risk.

The global deal to impose a 15% minimum effective tax rate on multinational businesses could result is a substantial tax windfall for Luxembourg. National statistics office STATEC estimates €5.1bn of new tax revenue could result, equating to 38.5% of the country’s total tax take.