Luxembourg's Minister of Finance, Gilles Roth;
Credit: ChD
On Tuesday 23 January 2024, Luxembourg’s Minister of Finance, Gilles Roth, presented to the Chamber of Deputies (Luxembourg's parliament) of the Finance Commission and the Budget Execution Control Committee the financial situation of the State as of 31 December 2023.
The Central Administration deficit provisionally amounted to €630 million as of 31 December 2023. Expenditures will still be recorded during the so-called additional period which runs until April 2024, so that the deficit for the entire financial year of 2023 will be studied further.
Revenues at the central State level are slightly above budget forecasts (102.3% of the voted budget). However, there are disparities, depending on the type of revenue.
In terms of revenues collected by the Registration Duties, Estates and VAT Authority (Administration de l'enregistrement, des domaines et de la TVA - AED), the forecasts were confirmed. Registration fees showed a correction of around -€252.9 million (44.9% of the voted budget) and reflected the difficult situation in the construction sector and the significant drop in real estate transactions.
According to Luxembourg’s Ministry of Finance, the situation on the financial markets and interest rates explains the downward trend in revenue collected from the subscription tax (-€81.8 million). In terms of VAT, tax revenues only reached 94.9% of the voted budget.
Corporate revenues are doing well, the ministry noted. Community income tax and wealth tax were up by €313.3 million and €222.3 million respectively compared to 2022. These revenues represented 122.1% and 130.7% of the voted budget.
Revenues linked to personal income tax and the tax on wages and salaries respectively reached 119.3% and 98.9% of the voted budget.
Minister Roth commented: “The significant drop in revenues linked to real estate transactions clearly shows the need to act consistently, as provided for in the government programme. It is now a matter of taking courageous decisions to revive the housing construction sector and thus avoid a significant increase in business bankruptcies and unemployment. As for purchasing power, the reduction in the tax burden on households on 1 January 2024, with the adaptation of the tax scale up to 4 index brackets is on the right track and will support economic recovery.”
