Why to invest in Luxembourg
| Luxembourg at a glance | |
|---|---|
| LOCATION | Europe. Member of the European Union |
| CAPITAL | City of Luxembourg |
| OFFICIAL LANGUAGE | Luxembourgish, French and German are the national languages; English is also widely spoken. |
| CURRENCY | Euro. |
| POPULATION | 556,100 inhabitants (45.9% foreigners) 2014 |
| AREA | 2.586 km2 |
| POLITICAL | Constitutional Monarchy | Parliamentary Democracy |
| GDP | 53.7 billion € 2013 / 88.500€ per cápita 2014 Luxembourg has a highly developed economy, with the highest per capita Gross Domestic Product in the world according to the World Bank. |
| Source of economic figures: World Bank | |
Other financial data published by the Promotion Agency of Luxembourg.
An open, diversified, stable economy.
Very solid macroeconomic grounds.
State of the art infrastructures
Excellent connections to the markets in the European Union and the rest of the world.
An unimprovable location from where it is possible to reach 60% of the EU market in less than one day.
Distance from the capital to the border with
France 20 km (Paris, 380 km)
Germany 25 km (Frankfurt, 250 km)
Belgium: 20 km (Brussels, 200 km)
Approximately one hour by plane to: London, Zurich, Munich, Amsterdam, Paris, Frankfurt
For more than two decades, the economy of Luxembourg has competed under equal conditions with much larger economies: its strong growth, its commercial surpluses and its low unemployment and inflation rates, all in a stable, innovative setting, both for companies as well as consumers, have allowed it to repeatedly exceed the results obtained by neighbouring countries.
Thanks to the swift, flexible measures taken by the Government of Luxembourg and the private sector, Luxembourg has managed to maintain stability during the international economic and financial crisis.
The country has the highest per capita income in the OECD, growth in employment in the financial sector and a national banking system that remains very well capitalised pursuant to international parameters.
The credit rating agency Standard & Poor’s improved Luxembourg's rating to AAA in 2014.
Taxation and Type of Companies
According to a recent report by the World Bank on total tax rates, in which it compared company taxes and before tax profit, Luxembourg has the most competitive tax rate in the European Union. In the world rating of economies, Luxembourg holds post 15 of 189 and the first in Europe, according to the indicators of average tax burden and time taken to lodge tax returns.
The country has many Double Taxation Conventions by which it does not apply withholdings to interest payments and to fees paid to resident or non resident companies for patents, marks and know-how. Moreover, Luxembourg does not apply withholdings at origin on profit from liquidations.
Luxembourg has a favourable tax regime for income, capital gains and assets related to holding substantial stakes. According to the stake exemption regime, it is possible to obtain company tax exemption in Luxembourg on dividends received from companies classified in the European Union or countries bound by treaties (as long as they fulfil certain conditions). Likewise, the capital gains obtained from sale of qualified stakes may also obtain that exemption
In certain cases, the amounts received due to partial or total liquidation of a subsidiary may obtain the benefit of exemption foreseen for stakes.
Taxation of Individuals
The income tax applicable to natural persons is calculated according to the level of personal annual income. This scale is progressive.
| INCOME BAND (in euros) |
TAXATION RATE |
|---|---|
| Less than 11.265 | 0% |
| From 11.265 to 13.173 | 8% |
| From 13.173 to 15.081 | 10% |
| From 15.081 to 16.989 | 12% |
| From 16.989 to 18.897 | 14% |
| From 18.897 to 20.805 | 16% |
| From 20.805 to 22.713 | 18% |
| From 22.713 to 24.621 | 20% |
| From 24.621 to 26.529 | 22% |
| From 26.529 to 28.437 | 24% |
| From 28.437 to 30.345 | 26% |
| From 30.345 to 32.253 | 28% |
| From 32.253 to 34.161 | 30% |
| From 34.161 to 36.069 | 32% |
| From 36.069 to 37.977 | 34% |
| From 37.977 to 39.885 | 36% |
| From 39.885 to 41.793 | 38% |
| From 41.793 to 100.000 | 39% |
| More than 100.000 | 40% |
Taxation of Corporate Entities
The general company tax rate is 29.22% and VAT is 17%.
Most Common Types of Corporate Entities
Limited Liability Company (Luxembourg Société à Responsabilité Limitée - SARL) - This is the most popular type of corporate structure in Luxembourg in the case of foreign investment. No more than 40 shareholders may contribute to form a company in Luxembourg and the minimum capital required is 12,400 euros. The shareholder's liability is limited to the amount of their contribution. The stake certificates may not be freely transferred. There are no residence or nationality requisites.
Stock Company (Luxembourg Société Anonyme - SA) - major companies are better structured as a stock company. Forming a company in Luxembourg for such a business requires a minimum of one shareholder and a minimum stock company of 31,000 euros. There are no residence or nationality requisites.
Benefits of the Luxembourg Corporate System
Special Tax Treatment for Yields from Intellectual Property Rights
Specific tax regime aimed at promoting management of innovation and intellectual property that includes a 80% exemption on yields obtained from use, exploitation and/or disposal of rights classified as intellectual property, that reduces the effective tax rate to 5.76%. This regime covers three situations:
- Remuneration for exploitation of intellectual property rights.
- The use a company makes of intellectual property rights for its own activity.
- Disposal of intellectual property rights.
The exemption regime is applicable to yields obtained from patents, marks, designs, models, author's rights to computer programs and domain names.
Moreover, such intellectual property rights are fully exempt from property tax.
Treaties
Double Taxation Agreements Network
Luxembourg has an ample double taxation agreements network . This means that Luxembourg is not only an attractive jurisdiction to invest in, but also through it.
LUXEMBOURG office
2 Astrid Street
L-1143 Luxembourg
Phone: +352 2088 0682
