An individual is deemed
to be a resident of Luxembourg for tax purposes
if they are domiciled there, or has their normal
abode in Luxembourg (for example maintains a property,
is present for more than 6 months, etc).
Those classified as residents
of Luxembourg for tax purposes are liable to pay
income tax on their income in Luxembourg and from
worldwide sources. Non-tax residents of the country
only pay income tax on the income derived from within
Luxembourg.
No Work Permit is required
for EU citizens. Residency can follow automatically
subject to a qualifying period (five years) and
certain conditions. Non-EU/EEA citizens must apply
for a Residence Permit and a visa is required.
Cost
of Residence Document (approx)
Work
Permit Required
Work
Permit Authority
The fee for a Residence Permit is
EUR30, and the application must be submitted to
the Ministry of Foreign Affairs (Directorate of
Immigration).
As Luxembourg is a member of the
EU, citizens of other EU countries may travel freely
to Luxembourg and do not require a Work Permit.
Non-EU/EEA citizens must obtain a Work Permit.
Department of Employment.
Personal
Income Tax
Corporate
Income Tax
Social
Taxes
Income tax rates range from 0% for
income up to EUR32,000 to 38% for income in excess
of EUR125,000. A 2.5% unemployment fund surcharge
(the Solidarity Premium) is also payable. There
are different classes of taxation based on civil
status and family. Sole proprietors and partnerships
are also liable to pay Municipal Business Tax, at
rates of between 6% and 10.5%. NB from CH: I can’t
unhighlight this, for some reason!
The national Corporate Tax rate is
21%, for companies with income in excess of EUR15,000
(with a 20% rate applying below that threshold)
but a 4% unemployment fund surcharge (the Solidarity
Premium) is also payable. Further, a Municipal Business
Tax is levied on profits of businesses. The rate
varies between 6% and 10.5%.
Employees and employers pay social
security contributions. These can vary depending
on the nature of a business. In general terms, an
employee will pay between 12.2% and 14.45% of earnings
and an employer between 11.4% and 19.16%. Self-employed
individuals are likely to pay approximately the
same as the combined employer/employee level in
social security contributions.
Capital
Gains Tax
Property
or Wealth Tax
Stamp
Duty
Short terms capital gains are taxed
as ordinary income, but shares, property and other
assets held long-term (the definition of which varies
according to the asset type) benefit from more favourable
rates and exemptions. Gains on the sale of a principal
residence are usually exempt.
Luxembourg properties are subject
to a municipal ground tax (paid annually) of between
0.7% and 1% of the value. A further calculation
(taking into account the property type, and various
other factors) is applied by the municipalities
to arrive at the final tax due.
Stamp duty is imposed at varying
rates on property transactions and various types
of asset transfer, legal and judicial matters.
Other
Taxes
The standard rate of VAT is 15%.
There are reduced rates of 3%, 6% and 12% for certain
types of goods and services.
I am facing a dilemma and would like to invite any reader to advise me.
I am a Brit who has lived outside UK since 1993- initially in Belgium (5 years) & subsequently in 4 African countries. After a year outside UK, the UK Inland Revenue confirmed my status as ‘non-resident’ for tax purposes and as I have had no income in UK, I have not completed a UK tax return for many years. I visit UK very rarely, normally for one or two weeks per year.
In May 2011, I was made redundent by my employers, who were downsizing. This coincided with a move to retire in the Netherlands, where I now have official residency (my wife is Dutch). I thought that, at 63 years of age, I would be unlikely to find suitable employment; in fact, I have not tried hard and had resigned myself to permanent (but slightly premature) retirement.
However, to my surprise, I have recently been approached (through a mutual acquaintance) by a company that wishes to use my skills on a project in the Isle of Man. The role, if & when confirmed, would see me working for about 10 days a month in Isle of Man, with about 5-7 additional days per month, working from home. Contract will be for about two years. The firm has asked me to confirm if I would prefer to be paid (and therefore be taxed) in Netherlands or Isle of Man, the idea being that I create a self-employment entity for this employment. I have no data on which to base a response. Given Isle of Man's traditional ‘low tax ‘environment, are there any benefits to declaring an income in IOM? Are there any Isle of Man residency implications? Netherlands takes a tax cut on total world wide income, and, as I have never had any contact with the Dutch authorities, I am reluctant to start such a relationship now. Do I have to declare income in both countries, with a breakdown prorata to the time spent in each jurisdiction? Should I declare income to UK Inland revenue?
If anyone has pertinent advice on these points, I’d be grateful to hear them.
Hi, I live in South Africa, and along with 2 business partners (one in South Africa and one in Ireland - all South African citizens though) are setting up a company that designs Smart phone applications. As they will be sold on the various platforms (none of which operate out of South Africa)we have to list our company as operating out of Ireland anyway. As such, we have decided to set up our company in the best tax country and are wanting info on whether Jersey or Malta is best? If anyone has some inside info we would really appreciate it!! Thanks!Mary
Just wondering if anyone 'on the ground', as it were, might be reading and able to help me...I was considering relocating my hairdressing business from the UK to Ireland before the economy started to go properly belly-up...now, not so much.
Are things as bad as they seem over there, or is it being over-hyped by the media? And is the government still keen to support small business people? Cos if not, I'll look elsewhere...
I am moving full time to France in Jan 2012 where I will be working as a freelance contract engineer to a number of Australian based companies. It is my choice to move to France not a work requirement. I will be renting my house out in Austrlalia and renting a house while I am in France. I hold both EU & Austrlain citizenshiip. I am married with 2 young children. Approx total family income $100k AUD. Do I pay tax in France or Australia or both ? Any help or guidance would be much appreciated.France move
Cyprus
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