Individual taxation
Individual income tax is based on global revenue. Non-residents are only taxed on certain revenue earned in (e.g. salaries).
From this revenue, exemptions, exonerations and expense claims are deducted.
Since 1/1/2002, the individual tax rate may vary between 0 % and 38,95 %.
Salaries are subject to withholding taxes. This can vary, depending on the annual revenue and the Tax Rate Table. It also greatly depends on the fiscal and marital status of the beneficiary, and the number of children.
Withholdings
-
The Interest received from a
Luxembourg entity (or bank) is not subject to any withholding tax. -
Dividends are normally taxed at source (20 % as at 1-1-2002 - 15 % in 2007). Taxable income is calculated on the revenue of the resident, with a possible tax credit.
-
For non-residents, the withholding tax can be reduced depending on fiscal status.
-
For income from artistic activities, a withholding tax of 10 % is due.
-
The same rate was applicable on royalties earned from an entity taxed in
Luxembourg but has been cancelled so that no withholding taxes are now due, paid from a Holding 1929 or from another company: 0 %. -
Director's fees are subject to a 20 % WHT on gross revenue. It can be calculated as taxable income along with other revenue, but is not deductible from the company’s income.
-
Again, no Withholding tax applies to income received from a 1929-type Holding company: interest on bonds, mortgages, dividends, royalties, etc.
Fortune Tax
A fortune tax is payable by
A very attractive inheritance tax rate also applies to Luxembourg Residents. For direct descendants, no tax is due, and for other cases the rate is low compared to other countries. [see more]
Withholding taxes on salaries and directors’ wages :
As an example, here are the various rates applicable for a couple with two children :
| Up to +/- 32 000 |
0 % |
| Up to +/- 45 000 |
3,5 % |
| Up to +/- 75 000 |
9,29 % |
| Up to +/- 100 000 |
15,87 % |
| Up to +/- 125 000 |
20,49 % |
The more children are at the charge of the tax payer, the lower the tax rate is. An important point is that these WHT reductions are also applicable for non-residents, on income received from a resident company for work done (salaries, director’s fees, etc.).
Commission fees are not taxable at source.
Social Security
The different rates for employees and employers are: (other rates are applicable for other types of workers)
|
Employee's proportion |
Employer's proportion | ||
| Health insurance (1) |
worker |
5,05 % |
5,05 % |
|
employee |
2,80 % |
2,80 % | |
|
Pension insurance |
8 % |
8% | |
| Dependance insurance(2) |
1,4 % |
- | |
| Health at work |
- |
0,11% | |
| Accident insurance |
- |
de 0,53 % à 6 % | |
| (1) Les rémunérations non périodiques sont cotisables en matière d'assurance maladie au taux de 2,70% par assuré, 2,70% par employeur (ouvrier ou employé). (2) Un abattement correspondant à un quart du salaire social minimum est à prendre en considération pour fixer l'assiette cotisable, soit 375,86€ indice 652.16, au prorata du nombre d'heures déclarées. | |||
The minimum wage/allowance is EUR1 466,75 per month per person. The maximum taxable income is EUR 88 006,32 (as at 1.1.2005 Above this, no social security contribution is claimed).
More information:
- Company Law
- Fiscal laws - Corporations
- Soparfi
- Securitisation
- Specialised Investment Fund (SIF)
- EC Directives
- Tax Treaties
- Private Asset Management Company (SPF)
- Head office transfer
- Foundation
- Permanent establishment
- SICAV
- IP-Copyrights - royalties
- SICAR
- Real Estate Company
- The European Company (SE)
- Fiduciary Agreement
- Tax consolidation
- V.A.T.
- Banking In Luxembourg
- E-Commerce - VAT
- The Residency status
- Resident saving
- Holding 1929
- Individual taxation
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