Luxembourg
For companies

HOW CAN LUXEMBOURG BE A TRUE ALTERNATIVE FOR COMPANIES?

The particularly advantageous frame of the direct taxation (company taxation) and indirect taxation (VAT) increases the attractiveness of Luxembourg as a place for companies.

Luxembourg offers many advantages to companies, including in terms of taxation.

Contribution rate (average)  (http://www.ccss.lu/cotisations/parametres-sociaux/)

social security without accident insurance:
Employee’s share: 13.25% (+2.31% for labouring class)
Employer’s share: 12.31% (+ mutual insurance which varies from 0.62% to 2.38% depending on the class risk)

Any company based in Luxembourg is taxable on four aspects only:

Community income tax (company taxation). The I.R.C. is set at:

  • 20% when the taxable profit does not exceed € 15,000
  • 21% when the taxable profit exceeds € 15,000
  • In some cases, businesses are subject to the payment of a minimum tax where the amount set is based on the closing balance in their last annual accounts.

City business tax

  • The city business tax is a tax that is levied only on commercial, industrial, mining and craft operations located in the Grand-Duchy of Luxembourg. It is calculated according to the operating profit of the companies and does not take into account the operator’s family expenses.
  • The commercial tax, according to the operating profit, is calculated on a base that corresponds to 3% of the operating profit, the operating profit being decreased by a € 17,500 reduction for taxpayers liable to community income tax and € 40,000 for other taxpayers.

Wealth tax

  • The wealth tax for resident and non-resident individuals has been abrogated since January 1, 2006. The following comment therefore only applies to previous taxation years. However, regarding collective companies and people companies, unit values for fortunes and operating rights should be set if at least one of the co-operators or co-partners is a legal entity subjected to the wealth taxation, the latter (resident and non-resident) being subject to the wealth tax.
  • The wealth tax is levied on the company’s assets; collected at the fixed rate of 0.5% on the operating wealth, made up of the unit value of the company on January 1, and calculated for three years.

Chamber of Commerce contribution

  • € 140/year for a s.à.r.l. / € 350 for a S.A.

Value added tax (VAT)

The Luxembourg government has set up a company-friendly environment by setting one of the lowest VAT rates in Europe, i.e. 3, 8, 14 to 17% depending on the business sectors.

Fiscal measure in favour of Intellectual Property

In order to reinforce the competitiveness of Luxembourg, the government has introduced a fiscal measure providing for the exemption of 80% of the income generated by copyrights on software programmes, patents, trademarks, drawings or models.

The new law encourages innovation, and allows Luxembourg companies to improve the fiscal processing of the income generated by their investments in the area of intellectual property (the effective taxation rate that applies is reduced from 28.59% to about 5.7%, making it one of the lowest rates in Europe).

It is our wish to support you all the way throughout the growth of your company (from start-up and in its everyday management) and become a real support to the growth of your business.

Please don’t hesitate to send us your online request for further information.

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