The Luxembourg Prime Minister has abolished capital duty as from 1 January 2009. Under current tax law, capital duty of 0.50% is due in respect of contributions to the capital of a Luxembourg company, unless certain exemptions are available (namely, for share-for-share mergers). There is currently no indication as to whether any transitional measures will be introduced with respect to the clawback of exemptions from capital duty that have been applied to share-for-share mergers carried out during previous years.
Another important measure is the decision of the government gradually to reduce the rate of income tax applicable to corporations from 29.63% to 25.5%.