On 22 February 2013, the Luxembourg Government Council adopted an amendment to the exit tax provisions on capital gains. This amendment is brought about by the decision of the European Court of Justice in National Grid Indus (Case C-371/10) in which it, inter alia, was held that the freedom of establishment precludes legislation of a Member State providing for the immediate recovery at the time of transfer, of tax on unrealized capital gains relating to assets of a company transferring its place of effective management to another Member State.

Currently, a resident company, which moves its legal seat and central administration abroad, is deemed to be liquidated. Latent capital gains on the assets and liabilities of the company are deemed to be realized at the moment of emigration, unless such assets and liabilities can be allocated to a permanent establishment of the emigrating company in Luxembourg. In this case, the book value of these assets and liabilities can be maintained for Luxembourg tax purposes.

The amendment provides that the emigrating company may request a deferral of the tax due on the capital gains. The requesting company will not be obliged to provide a guarantee to obtain the tax deferral.