The government earns a significant amount of revenue from the subscription tax, in fact more than €1 billion according to the latest budget project. Funds operating in the Grand Duchy have to pay the tax, which varies from 0.05 to 0.01% of their capital. To benefit from the various reduced rates, a certain part of the fund has to be invested into sustainable projects.
The Democratic Party (DP), the Luxembourg Socialist Workers’ Party (LSAP), and the Greens now want to introduce an amendment to ensure that natural gas and nuclear energy are no longer classified as sustainable as of next year.
Officials from the Association of the Luxembourg Fund Industry (ALFI) refused to comment on the issue at this time, but noted that they will analyse the potential of negative impacts on their business operations.
Christophe Murroccu, spokesperson for environmental organisation Mouvement Ecologique, stated that the government’s move would be a logical consequence given that it has long refused the position of the European Union by which nuclear and gas are classified as sustainable.
The amendment in question has yet to be cleared by all of the country’s political parties. Both the Pirate Party and the Christian Social People’s Party (CSV) have requested more details about the move and the current earnings of funds.
The Left have meanwhile expressed support for the exclusion of nuclear and gas from the reduced rate. However, they also noted that instead of lowering the subscription tax on green funds, the government should rather raise it on “brown funds”.
At present, article 174 of the fund law says that a fund can benefit from the reduced rate of 0.04% if 5% of fits capital are invested in sustainable activities. To benefit from the 0.01% rate, 50% of investments have to fulfill sustainability criteria, a regulation that would not change with the proposed amendment.
