Luxembourg’s Chamber of Commerce is proposing a super tax deduction for businesses investing in digital, environmental or R&D transformations.
Outlining the proposal in his blog, chamber of commerce director general Carlo Thelen argues that the investment in these areas are “colossal, but essential to maintain a high level of competitiveness in a context of rising energy prices.”
The blog examines the importance of attracting cutting edge tech firms and of offering pioneering public services, in order to attract and retain talent and investment.
In his post, Thelen praises the current bill on income tax (bill 8047), offering a tax deduction for individuals who invest up to €5,000 in savings in SMEs with sustainable or digital activities.
But, he suggests increasing the threshold to encourage more people to invest in earlier stage startups as business angels.
He writes: “Luxembourg lacks a measure allowing the granting of a tax advantage for investments in startups, in order to encourage individual taxpayers (whether resident or not) to invest in cash in the target companies.”
Thelen calls for a solution for investors who wish to benefit from any tax advantages while remaining anonymous, saying “many investors do not wish to be known.”
One way to do this could be through the use of private or semi-public private equity funds specifically focused on growth or development capital.
He writes: “Belgium, the UK, France and Ireland all have in common that they have, among other things, a tax incentive regime for the financing of startups. These measures have proven to be effective in attracting private funding and boosting the ecosystem.”
In order to attract and retain talent, Thelen suggests the introduction of a participation and profit-sharing scheme enabling employees to be more involved in their company’s results.
He concludes: “Talents will be at the heart of all the attention, as they are one of the cornerstones of the digital and environmental transitions.”