Proposal for a Tax super-deduction to accelerate the digital and ecological transition

The Chamber of Commerce, in collaboration with the UEL, has developed a proposal to introduce a new tax measure, in the form of a super-deduction, to help companies invest in the digital and ecological/environmental transition, and in research and development.

Such a measure is, according to the Chamber of Commerce, a key element in helping to achieve the Government's objectives for sustainable development.

The measure proposed by the Chamber of Commerce aims to accelerate the digital and environmental transition, to stimulate research and innovation and to strengthen the country's competitiveness and attractiveness. It should also help to further diversify our economy.

It would take the form of a tax super-deduction for expenditures in the following three strategic areas:

• digital transition;
• environmental/ecological transition;
• research and development.

The measure would apply, by option, to any taxpayer making a profit by means of commercial, agricultural or forestry activities, or by practicing a liberal profession, and meeting certain conditions.

With the super-deduction, companies could thus deduct, in addition to the normal deduction of the eligible expense in question, an additional tax-deductible expense amount varying according to their size, with a higher additional deduction rate for startups and small and very small companies.

The super-deduction would be deducted from the tax base for income tax and municipal business tax and combined with a wealth tax exemption for those individuals active in the above three areas.

In order to spread the amount of the tax advantage out over time and to adapt it to the taxpayers' ability to pay (without allowing them to create losses), it is planned to limit the maximum overall amount that can be deducted annually under the super-deduction to a certain percentage of the company's taxable income, while providing for the possibility of carrying over the unused super-deduction.

This measure is compliant with international and European tax regulations.

This proposal was submitted on behalf of the Chamber of Commerce by its President Luc Frieden to Finance Minister Yuriko Backes during their meeting on 4 July 2022.

Annexes: See below attachments, published in French.