The Luxembourg constitutional court, on 10 November 2023, determined that a key provision of the net wealth tax law was in conflict with the principle of equality enshrined in the constitution. Specifically, the court that paragraph 8, subparagraph 2, point a of the law violated this principle, affecting companies with total balance sheets ranging from €350,000 and €2m.

Previously, these entities faced a minimum net wealth tax of €4,815. However, in light of the court’s decision and until legislative amendments are made, they will be subject to a lowered minimum net wealth tax of €1,605,  the law firm Arendt & Medernach in a client note on 23 November 2023.

Luxembourg’s net wealth tax is based on the unitary value of companies, determined by their adjusted net asset value as of 1 January each year, Arendt & Medernach explained. The standard net wealth tax rate is 0.5%, rising to 0.05% for net wealth over €500m. Previously, a minimum net wealth tax of €4,815 was imposed on companies whose financial assets, receivables from affiliated undertakings, transferable securities and cash deposits collectively exceeded 90% of their total balance sheet and amounted to more than €350,000.

This tax system faced scrutiny from a lower administrative court, leading to a referral to the constitutional court ( of 18 April 2023).