Taxation and Advice: Practical Guide for Expats

Luxembourg: an attractive tax system

Luxembourg is renowned for its attractive economic, political, and tax environment, making it a popular destination for expatriates from around the world. With a solid regulatory framework, favorable tax rates, and internationally renowned financial advisors, the Grand Duchy offers many advantages for individuals and businesses alike.

Is Luxembourg a tax haven?

A solid regulatory framework

Luxembourg has a rigorous and transparent regulatory environment, contributing to its reputation as a stable financial center. The Commission de Surveillance du Secteur Financier (CSSF) ensures the stability of the Luxembourg financial system. It guarantees compliance with standards, creating a climate of confidence for investors and expatriates.

A competitive tax regime

Luxembourg offers an attractive tax regime, which explains why many multinationals have set up there and why there is such a large influx of expatriates. For individuals , the Luxembourg tax system is progressive, which means that income tax is calculated on the basis of income received. In addition, low-income households are exempt from tax, while others benefit from tax relief on their taxable income. This allows expatriates to better manage their financial situation and enjoy favorable tax treatment while residing in Luxembourg.

Learn more about the tax deductions available to individual taxpayers.

Many multinational companies establish their European headquarters or operational centers in Luxembourg. This is because the tax environment is favorable, with relatively low tax rates and attractive tax incentives for their international activities.

Tax transparency: a change of course

Although Luxembourg has long been associated with the image of a "tax haven," the situation has changed considerably. Since 2013, banking secrecy has been lifted and the country is working towards greater tax transparency, complying with international standards. The Grand Duchy is now committed to combating tax evasion and is implementing strict measures to ensure that its tax system complies with European and global directives.

The Grand Duchy wishes to demonstrate its commitment to aligning its tax policy with international standards. It is working towards international cooperation on the exchange of tax information.

Bilateral tax treaties

One of Luxembourg's main tax advantages for expatriates is its policy of bilateral tax treaties with many countries. These agreements avoid double taxation and simplify tax procedures for people with income abroad. This means that an expatriate residing in Luxembourg will generally not be required to pay taxes in their country of origin, thereby reducing their overall tax burden.

Find out more about filing your taxes in Luxembourg.

A complex but well-structured tax system

The Luxembourg tax system is based on a set of tax laws that apply to individuals and businesses.

At first glance, Luxembourg's tax system appears to be more advantageous than those of neighboring countries.

Personal taxation in Luxembourg

In terms of direct taxes, expatriates must take intoaccount personal income tax, as well as other taxes such as value added tax (VAT). The personal income tax rate is progressive and is deducted at source, which simplifies administrative procedures. It is calculated based on the taxpayer's income level.

Inheritance tax is not levied between parents and children who are residents of Luxembourg.

There is no property tax as in France, and social security contributions do not significantly increase the tax burden, particularly on property income.

Find out more about personal taxation.

Corporate taxation in Luxembourg

Luxembourg is also a strategic location for international companies, particularly thanks to its favorable tax regimes. Among the most attractive are holding companies or Soparfi and asset management structures, which allow companies to benefit from favorable tax treatment. These regimes are ideal for multinationals seeking to establish a headquarters or operations in Luxembourg, while enjoying lower taxation than in other European countries.

In addition, companies can benefit from tax incentives for investments in research and development. This support encourages innovation and the development of high-potential companies, thereby contributing to Luxembourg's attractiveness to foreign companies and investors.

In short, companies must pay various taxes. However, Luxembourg offers them an attractive tax regime that is favorable to investment. Corporate income tax is set at 15% for profits below €200,000 and 17% for profits above that amount.

This favorable tax regime makes Luxembourg a destination of choice for expatriates and international entrepreneurs.

Support from financial and tax experts

Luxembourg is home to a multitude of financial and tax service experts renowned for their expertise. Whether you are an individual or a company, consulting a tax advisor can be essential to optimizing your financial situation.

Luxembourg tax experts will guide you on the best taxstrategies to adopt based on your status, objectives, and income. Their advice is essential, particularly for understanding the intricacies of the Luxembourg tax system and avoiding errors in your tax returns. Their analysis also helps you choose the type of union that best suits your situation and needs.

For expatriates, an advisor can also help you structure your income and assets, taking into account the specificities of Luxembourg and international tax law. Tailored support allows you to maximize tax opportunities while ensuring compliance with local and international legislation.

Tax advice in Luxembourg is essential for optimizing the tax situation of residents and businesses.

And as everywhere else when you arrive in a new country, it is crucial to understand the tax system and be able to benefit from financial advice.

More information on taxation and advice in Luxembourg.

Download our practical guide to Luxembourg to find out everything you need to know as a newcomer.