Luxembourg: The domicile of choice for financial services - Alfi

Tax
1. Personal Income Tax
Personal taxation and social-security regimes
for people working in Luxembourg are very
competitive compared with those in other
European countries. The marginal tax rate at
30 June 2010 was 38.95% and social-security
contributions are largely capped.
For further information, visit the website
of the Luxembourg Direct Tax Authorities
www.impotsdirects.public.lu
Luxembourg paying agents withhold tax on
interest income at a flat rate of 10%.
2. Tax on Companies
Over recent years Luxembourg has attracted
a number of large international companies
and financial institutions, reflecting the appeal
of its infrastructure, its multicultural workforce,
competitive taxation and business-friendly
environment. Company taxation includes
corporate profit tax, valued added (sales) tax
and social security contributions for employees.
3. Value Added Tax (VAT) –
Application of the EU VAT Package
Luxembourg VAT rates are currently the
lowest in the EU, which has encouraged
e-businesses to move their European operations
to Luxembourg to gain an edge in pricing.
For further information, please consult the
website of the Luxembourg Indirect Tax
Authorities: www.aed.public.lu
4. Double Taxation Treaties
Luxembourg has signed, and continues to sign
and apply, a large number of treaties with EU
and non-EU countries to avoid double taxation
of individuals and companies resident for tax
in another country.
The complete list of the double taxation
treaties signed by the Luxembourg government
is available at www.impotsdirects.public.lu
Luxembourg tax authorities are also available
for consultations on demand with investors.
Labour Costs
2008 annual gross salary of €100,000 – Married / 2 children
Switzerland Luxembourg Ireland UK Germany Netherlands France Belgium
Total cost for
employers
106 111 111 110 111 107 149 132
Minus tax/social
security employers
6 11 11 10 11 7 49 32
Gross salary (t=100) 100 100 100 100 100 100 100 100
Minus tax/social
security employees
25 28 30 33 35 43 29 48
Net employees 75 72 70 67 65 57 71 52
Ratio Net Cost (%) 71 64 63 61 59 53 48 39
Source: ALFI, Luxembourg Where Else, 2010
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