Luxembourg proposes ending the 17-year income-tax loss limit

The proposed loss mechanism

Article 4(4) would amend Article 114 of the Income Tax Law of 4 December 1967. It deletes the seventeen-year reference and retains losses arising in financial years closed after 31 December 1990. The separate paragraph preserving unlimited carry-forward for 1991–2016 losses would be repealed because that protection would sit within the broader rule.^[1][2]

The distinction between loss cohorts matters. Article 1(12) of the Law of 23 December 2016 introduced the seventeen-year rule while preserving unlimited carry-forward for losses from financial years closed between 1 January 1991 and 31 December 2016. Removing the time limit would therefore extend relief for later losses; it would not make the protected older losses unlimited for the first time.^[2][1]

Conditions are not abolished

ACD’s informational coordinated Income Tax Law, updated on 8 May 2026, reproduces that distinction in Article 114. It also sets out the requirements for proper accounts, losses not previously offset or deducted, deduction by the person that suffered the loss, and oldest-loss-first ordering. The Bill’s amendment does not delete those conditions. The ACD text is expressly informational rather than an official legal consolidation.^[3][1]

The timing requires particular care. Article 32 gives the Bill a general entry date of 1 January 2027, but places Article 4(4) within a separate application-year exception. In the deposited wording, that year is only ‘20’. The general date cannot safely be substituted for the incomplete exception; an application year for the loss amendment remains unestablished.^[1]

Implications for group tax planning

For multinational groups with Luxembourg businesses, the proposal is relevant to the future expiry profile of tax losses. A practical starting point is to separate loss vintages and retain evidence of prior use and accounting compliance. The proposal is not an enacted entitlement, and groups should verify the final application clause before changing the treatment of a loss.^[1][2][3]