Following the earlier decision made by the European Commission, Luxembourg terminates regime for 1929 holding companies. Earlier, officially listed companies will continue to benefit from the regime still further four years.

Holding 1929 regime was officially abolished with effect from 1 January 2007. But under the new law before officially listed companies will be able to continue to benefit from this regime until 31 December 2010, regardless of any transfers of shares during the period.

Remember: according to the tax regime of 1929, qualifying companies are exempt from paying corporate income tax, tax retained from payments of dividends and other taxes in Luxembourg. According to the European preferential tax treatment for Exempt, Milliardaire and financial holding companies in 1929 violates the rules of the EC Treaty on state subsidies by giving «unjustified tax advantages» of certain suppliers of financial services based holding structures in Luxembourg. The Commission ordered the Government of Luxembourg to eliminate this tax regime to the end of 2006, but allowed to enter a transitional period for existing companies under the scheme, which will allow companies to continue to receive benefits until 2010.

But not everyone agrees with this decision. The company Tenaris, a leading global manufacturer of pipelines for oil and gas industry, previously requested clarification of the treatment phase, pointing to Article 2, Paragraph 3 of the European Commission decision, that benefits the transitional period will cease to have effect if the whole or part capital of such companies will be moved during the transition period.