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STRATEGIC POSITION IN EUROPE

The Grand Duchy of Luxembourg, a country of 1,000 square kilometres with a population of 493,000 people, is located at the heart of Europe, just one hour away by plane to many capital cities – London, Paris, Brussels, Amsterdam, Zurich, Geneva, Frankfurt and Berlin.

 

BACKGROUND

In spite of being one of the smallest countries in size, Luxembourg is the world's wealthiest country by GDP and provides a unique low tax environment for international investors. The country is used extensively in corporate structuring for cross-border transactions, but because of its place in Europe's political environment it is constantly changing its tax laws to avoid conflicts with the tax authorities of other countries.

 

AN OPEN AND DYNAMIC ECONOMY

With one of the most dynamic economies in the world, and second only to the USA in assets under management through its private banks and its investment funds, Luxembourg is a reliable political and business partner at European and International level. Luxembourg forms an integral part of one of the largest monetary and economic areas in the world. Luxembourg also plays a key role in the development of a larger cross-border area formed by Luxembourg and neighbouring regions in France, Germany and Belgium.

More than 35,000 companies from all over the world have chosen Luxembourg as their base to do business. Now it is your turn!

 

A FAVOURABLE LEGAL AND TAX SYSTEM

Luxembourg has quickly adopted the European Directives on the financial sector and as such has created a favourable environment for such economic activities as: Banking; Investment Funds; Insurance; Holding; Finance; Leasing; Securitisation; Intellectual Property companies; and Informed investor investment funds.

Luxembourg’s tax rates are at the European average level. Resident companies are subject to corporate tax on their worldwide income at the rate of 28.59% on their profits. Non resident companies are only subject to corporate tax on profits made from Luxembourg source income. However, a relatively simple tax system and a friendly tax administration ensures that the tax base is kept at a reasonable level. Companies can benefit from various tax exemptions, for example tax free dividend income and capital gains, 80% exemption on royalty income; no withholding tax on interest and dividends paid by investment funds.

In addition, personal income tax rates and social security contributions are one of the lowest in Europe. The progressive income tax has a maximum marginal rate of 38.95% on incomes above €39,885 per annum and the social security rates are 11% for the employee and 13% for the employer. No wealth tax and no inheritance tax between family members and a final 10% tax at source on interest adds to the relatively low tax cost for residents.

Since VAT was introduced in the European Union, Luxembourg has always applied the lowest VAT rates. The Luxembourg VAT rates are: 3, 6, 12 and 15%.

Luxembourg is, and will remain, a beneficial country for international business structuring because of its progressive and adaptive approach. As a result, Luxembourg's tax laws frequently come under examination by other EU states and are prone to change. If you want to take full advantage of Luxembourg's situation and open a company in Luxembourg, then talk to us about company formation and restructuring and everything else you need to know. Our team of experts is on hand to steer you safely through Luxembourg's complex tax regulations.

 

TOP LEVEL FINANCIAL SERVICES INDUSTRY

The Luxembourg financial centre is currently composed of 152 banks, 3,370 Investment Funds 94 Insurance companies and 242 re-insurance companies. There are another 142 other financial sector professionals registered with the Financial Sector Supervisory Authority (CSSF).

 

HIGH QUALITY OF LIFE

Luxembourg enjoys one of the highest standards of living not only in Europe but among all developed countries in the world. In addition, the cost of goods in Luxembourg largely corresponds to prices in neighbouring countries (France, Germany and Belgium), while income per employee is much higher. In consequence, the purchasing power of Luxembourg residents is one of the world’s highest.

 

GREAT LABOUR AND POLITICAL STABILITY

Luxembourg enjoys a high degree of labour and political stability. The near-absence of strikes can be explained by the widespread use of an effective mediation system between management, trade unions and the government.

Luxembourg’s political system also shows great stability. In addition, the country plays an important role in the EU constitution.

 

A SKILLED MULTILINGUAL WORKFORCE

The high level of specialisation, high added-value business activities and innovation and research capacity have resulted in the availability of a highly qualified Luxembourg workforce. In order to maintain and further develop the work-force’s skills and qualifications, Luxembourg invests continuously in education, training and research. The University of Luxembourg, the Luxembourg school of Finance and many other training and research institutions contribute to the development of human capital.

One of the greatest advantages of Luxembourg are the number of languages people speak. The majority of Luxembourg’s native workers speak at least three languages fluently - English, French and German in addition to Luxembourgish. In view of the multinational population, many other languages are also spoken such as Portuguese, Italian and Scandinavian languages , which is an obvious advantage in establishing and developing business relations with foreign partners.

 

FLEXIBLE AND FRIENDLY AUTHORITIES

One of the main advantages of Luxembourg’s institutions is their accessibility. Officials are open to dialogue and easily contactable. In consequence, potential problems can be discussed with ease and decisions taken within a short-time frame.

 

LOW CRIME RATE

Lastly, Luxembourg has a very low crime rate. According to a Mercer Human Resource survey, Luxembourg City is one of the world’s safest cities.

 

 

 

 

 

 

WHY DO BUSINESS IN LUXEMBOURG ?