Luxembourg update: Budget law extends tax rate reduction
On December 21 2004 the Luxembourg Parliament passed the Budget Law for 2005. Although there will be no changes to tax rates, the Budget Law provides for an extension of the law of July 30 2002, which was due to expire in 2004, until the end of 2007. This law grants, among other things, reduced tax rates on capital gains realized upon disposal of land, higher depreciation rates for residential buildings and reduced real-estate transfer taxes. Capital gains from the disposal of real estate are taxed at 25% of the normal income tax rates, depreciation of qualifying buildings is 6% for the first six years and a credit of up to €20,000 ($26,000) is available for transfer taxes.
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