This government aid, a result of the tripartite meeting in March, will engender a tax cut of up to several hundred euros in 2023 for Luxembourg workers and pensioners:
The reduction will be accentuated in 2024 by the adjustment of the tax scale, which will lower the reduction of salary increases due to the index.
Members of the State Council accepted the principle of retroactive application of the tax credit: “While, as a general rule, the principle of legal certainty precludes a legislative or regulatory disposition from being applied retroactively, there may be an exception if the aim to be achieved requires it in the general interest and if the legitimate expectations of the interested parties are duly respected”.
Even in the event of a late vote, the tax credit will count from 1 January 2023 and be paid in a single instalment for the months that have already passed.
Given the “accumulation of tax credits”, the State Council is asking for a closer read of the current arrangements for taxpayers. These have just lost the energy tax credit at the end of March, which could mean a pay cut in April.
Once this stage has been completed, MPs will be able to prepare the final legal text before proceeding to the vote. This will probably happen before the summer and will enable the tax credit to be paid on salaries and pensions the following month.
