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Our Services
Corporate Services: Luxembourg
Tax Law Expertise: Luxembourg & International
Company Formation
We are in position to support you with opening your company or entity from A to Z: starting with drafting your Articles of Association to your first employees and effectively launching your activity. The creation of a company might be a burdensome process - we focus on preparing your file from the start to meet & anticipate as much as possible the requirements of local authorities. Contact us for more details.
An Overview LuxCo Formation
For your easier reference and information, we outline herein the main steps and milestones met in the process of opening your company or entity in Luxembourg (adapted on a case-by-case basis).
The most common company forms in Luxembourg are the Société Anonyme (SA), the Société à Responsabilité Limitée (SARL), and the Société à Responsabilité Limitée – Simplifiée (Sàrl-S). However, depending on the objective of the business, the founder(s) may prefer other forms for more complex projects such as the Société par Actions Simplifiée (SAS), the Société en Commandite par Actions (SCA) or the Société Civile (SC). Please note that in all cases, a local notary is required for the creation of the company, except for the Société Civile (SC) and the Société à Responsabilité Limitée – Simplifiée (Sàrl-S).
Please refer below to a summarized description for the types of legal entities as per Luxembourg Corporate Law - Article 100-2 Loi modifié du 10 aout 1915 sur les sociétés commerciales (L.S.C.)
Once the choice of company’s legal form has been decided, Luxia Partners advises the clients, in conjunction with a local notary, on the drafting of the Articles of Association (AoA) of the company to be formed as well as on any required contracts associated with it. Such support with the contract might be related to drafting Shareholders' Agreements, Minutes related to the acquisition or creation of subsidiaries, contract for lease of the registered office etc.
The company to be created will need a bank account for the deposit of Social Capital and further for its operations. Luxia Partners is in position to assists the entrepreneurs with opening a bank account with a Luxembourg bank.
Before starting any commercial, industrial, artisanal or service provision activity, an Business Permit is required for all businesses/legal forms in Luxembourg who provide a commercial, artisanal, industrial or liberal professions (as stipulated in the law of 2011). Luxia Partners is in position to assists the founders in their preparation of the file and its submission towards Luxembourg Ministry of Economy to obtain the required Business Permit.
Companies after having obtained the Business Permit and before starting the activity and when they plan to employ personnel must register with the Common Social Security Center (CCSS). In addition, companies after having obtained the Business Permit and who consider generating taxable turnover must apply for VAT registration with the l’Administration de l'Enregistrement, des Domaines et de la TVA (AEDT). Further, all Luxembourg companies, regardless of their form, must also be registered with the l'Administration des contributions directes du Grand-Duché de Luxembourg (AED).
Legal Forms Luxembourg
Please refer below to a summarized description for the types of legal entities as per Luxembourg Corporate Law - Article 100-2 Loi modifié du 10 aout 1915 sur les sociétés commerciales (L.S.C.)
- A sole proprietorship is a business entity where a person engages in commercial activities in their own name.
- This type of enterprise requires minimal administrative procedures, and the proprietor is responsible for the business's liabilities and risks.
- There are three categories of sole proprietors: traders, craftsmen, and self-employed intellectual workers. Sole proprietors must possess the necessary qualifications and permits for their activities.
- They must register with the social security authorities as self-employed workers and may use a unique trading name.
- There are no capital requirements, and the proprietor has complete control of the business. They are also solely responsible for financing the business and have unlimited liability for debts incurred by the business.
- Sole proprietors must maintain transparent accounts and register with the Trade and Companies Register. Certain professions may not allow a sole proprietor to convert to a company, and the duration of the business is subject to administrative authorisations and profession-specific rules.
- The law does not provide for financial oversight of sole proprietorships.
- A SCS is a type of commercial company that needs at least two partners, a general partner, and a limited partner.
- The two partners differ in the nature of their liability. A natural or legal person can be a partner in an SCS. Before establishing an SCS, general partners must have authorization to do business as traders.
- An SCS may be created through a private deed known as a partnership agreement, containing company details and partners' contributions.
- The capital is made up of ownership shares, and the contributions may be in cash, kind, or services.
- There is no minimum required capital.
- The partnership agreement governs the distribution of dividends, which may be unequal.
- The management body consists of the general meeting of partners who make decisions by a majority vote representing three-quarters of ownership shares.
- The SCS may be dissolved by shareholders by a majority vote or legal ruling for legitimate reasons.
- The company may change its corporate form or be established for a limited or unlimited duration. The transfer of ownership shares must follow the rules outlined in the partnership agreement, or it will be considered null.
- TheSCSp is similar to a limited partnership, but it does not have a legal personality.
- The SCSp was inspired by the LP and is not yet widespread in Luxembourg. It serves as an additional investment vehicle suited to investment funds.
- To establish an SCSp, at least two partners, including one general and one limited partner, are required. The general partners must have the authorizations to conduct business as traders, while limited partners do not need such authorization.
- Costs involved in creating an SCSp include publishing in the Trade and Companies Register (RCS), administrative authorizations, notary fees, and auditor costs.
- The SCSp is established through a partnership agreement that must be filed with the RCS.
- Ownership shares must be registered shares, and their transfer is only possible according to the partnership agreement.
- The dividend distribution follows the terms of the partnership agreement, which can provide for unequal distribution.
- An SENC is a type of commercial company where partners have joint and several liability, making them unlimitedly responsible for the company's obligations. All partners can do business as traders in their own names.
- SENC is an ideal company form for small and medium-sized family-run commercial or craft businesses due to its simple and inexpensive rules, absence of minimum capital requirements, and flexibility in drafting the articles of association.
- To establish an SENC, at least two partners are required, and they should ensure that they are authorized to conduct business in Luxembourg before forming the company.
- The company's shares are not transferable, unless agreed upon by all partners, and management decisions are made through a general meeting of partners.
- The daily management of the company's business can be delegated to one or more managers, and the manager acts as the representative of the company.
- The partners are jointly and severally liable to an unlimited extent for all the company's commitments to creditors and the tax administration resulting from the activities of the business.
- The Sàrl is a type of commercial company that combines features of both capital companies and partnerships.
- It is the most common form of incorporation in Luxembourg, with approximately two-thirds of companies being Sàrl.
- The Sàrl can have as of 2 and 100 shareholders, and there is also a "single member" Sàrl that can be set up by a single shareholder.
- Anyone who wants to set up an Sàrl in Luxembourg must have the necessary authorizations and approvals.
- Setting up an Sàrl entails certain costs, including a share capital contribution of at least €12K, notary fees, the cost of publication in the Trade and Companies Register, and statutory auditor fees (if required).
- The Articles of Association must be filed with the Trade and Companies Register (RSC), and the company must have a unique name that is different from any other existing company.
- The Sàrl may be formed for a limited or unlimited duration, and it may change its corporate form in the course of its lifetime through shareholder decision.
- The Sàrl may be dissolved for various reasons, such as completion of its business purpose or a judicial ruling to dissolve the company.
- The Sàrl-S is a type of commercial company that has different rules than a conventional Sàrl (Société à responsabilité limitée) in terms of requirements for forming the company.
- Sàrl-S reduces the burden of some requirements, such as allowing entrepreneurs to start with a minimum share capital of only €1 and form the company with a private deed instead of a notarized document.
- Sàrl-S is only available for natural persons who are craftsmen, traders, manufacturers, or certain liberal professionals.
- The company name must be unique and the purpose of the company must be specified in its deed of incorporation.
- Sàrl-S can have between 1 and 100 shareholders, and the share capital must be at least €1 and no more than €12k.
- The shares in an Sàrl-S are registered shares and may not be issued to the public.
- The company is managed by one or more managers, who may or may not be shareholders, appointed by the shareholders, and the shareholders' assembly represents the company's capital and makes decisions regarding the company.
- Sàrl-S can be dissolved for various reasons, such as expiry of the company's duration or voluntary dissolution decided by the shareholders at the meeting of shareholders. The company must have administrative certificates to accompany any document that establishes the voluntary dissolution of the company.
- The SA, or public limited company, is one of the most common types of companies in Luxembourg, offering advantages such as limited liability and regulated access to capital.
- Although commonly used by large businesses, it can also be suitable for SMEs, as its shares can be easily transferable.
- Shareholders are attracted to the limitation of liability and anonymity it offers. It can be appropriate for businesses of different sizes and activities, allowing for the promotion of business development and access to financial markets.
- The SA can be formed by one or more natural or legal persons, with at least one partner required.
- Setting up an SA involves certain costs, including notary fees, publication in the Trade and Companies Register, statutory auditor fees if required, a minimum share capital contribution of € 30'000, and any costs related to the issuance of administrative permits.
- Depending on the size of the company, an SA may be required to have its financial statements audited by a certified auditor or a company auditor (fr. un commissaire aux comptes ou un réviseur d'entreprise agréé. ).
- The SCA is a type of commercial company that combines the features of a limited partnership (SCS) and a public limited company (SA). Unlike an SCS, an SCA has freely transferable ownership shares, making it suitable for all types of businesses.
- Its management is stable, and it can resist hostile takeovers, making it ideal for small and medium-sized family businesses.
- The SCA is established by at least two partners, a general partner and a limited partner, where the former has more liability than the latter.
- To set up an SCA, one must have the necessary authorizations to carry out business activities in Luxembourg.
- The process entails certain costs, including notary fees, the cost of publication in the trade and companies register (RCS), a minimum share capital contribution of €30'000, and fees related to the issuance of administrative permits.
- The SCA's deed of incorporation must contain mandatory information such as the identity of the signatories to the deed of incorporation, the SCA's company name, its corporate purpose and registered office, and information on the shares and contributions.
- The managerial structure of an SCA consists of a shareholders' meeting, a supervisory board, and one or more managers, who may or may not be general shareholders and are appointed in accordance with the articles of association.
- The Supervisory Board oversees the company and issues recommendations on questions submitted by the manager. It performs its duties on behalf of the shareholders.
- The SAS is composed of one or more individuals who commit a specific stake and its capital is divided into shares.
- The SAS has some rules in common with the public limited company (SA), but its main appeal is the limitation of mandatory provisions applicable to its operation. However, the freedom left to partners in incorporating requires careful drafting of articles of association.
- The SAS can be established by a natural or legal person, with at least one partner and no limit to the number of partners.
- Setting up an SAS involves certain costs, such as notary fees and the cost of publication in the Trade and Companies Register, with a share capital contribution of at least €30'000.
- The SAS must be formed in the presence of a notary, and an auditor's report is required in the case of a contribution in kind.
- The SAS may change its corporate form by decision of the partners, and it may be dissolved either automatically or voluntarily.
- Contributions in cash or kind are permitted, with contributions in kind covered by an assessment report drawn up by a statutory auditor.
- A civil company, or société civile (SC), is a type of company commonly used in civil, agricultural, freelance, and intellectual professions, and it is often utilized to manage immovable assets through a société civile immobilière (SCI) formed under civil law.
- There are four types of civil companies: société universelle tous biens présents, société universelle de gains, société particulière, and société civile immobilière.
- If a civil company engages in commercial activities, its tax and legal status will change. Individuals and legal entities can form a civil company as long as they have civil capacity and meet the minimum requirement of two partners.
- There are certain costs involved in setting up a civil company, including publication costs and notary fees. The capital in an SC is made up of ownership shares, and there is no minimum required capital.
- The managerial structure is established in the articles of association, and the SC can be managed by one or more managers, who may or may not be partners.
- The partners decide on amendments to the partnership agreement, any change in the SC's nationality, the approval of financial statements, the distribution or reinvestment of profits, and the appointment of managers. The law allows for the articles of association to establish how the SC operates.
- The SIS is open to individuals or groups who want to create a commercial company with a societal or social purpose.
- Only commercial companies that follow the principles of the social and solidarity economy are eligible for SIS accreditation.
- The SIS provides a clear legal framework, a proper tax regime, and access to national and European public procurement contracts.
- SIS accreditation guarantees that the company's economic activities are genuine and responsible, and allows for the promotion of the company's social purpose.
- The SIS incubator offers tailor-made support to help establish an SIS. SIS accreditation is open to limited liability companies, public limited companies, simplified limited liability companies, and cooperative companies. Applicants can be existing companies or those in formation. To obtain SIS accreditation, the draft articles of association, as well as all the requested supporting documents, must be submitted.
- Costs related to setting up an SIS include the cost of publication in the Trade and Companies Register (RCS), notary fees, and approved statutory auditors' annual fees.
- The corporate purpose of an SIS must provide support to vulnerable individuals or contribute to preserving and developing social cohesion, among other things. The economic activity must involve the production, distribution, or exchange of goods or services.
- The company's legal form may be changed with the consent of shareholders.
- The SIS-accredited company is automatically dissolved at the end of its specified term, and it may be dissolved by a court decision if it no longer satisfies the requisite conditions.
- An European Company or Societas Europaea (SE), or European company, is a company that operates under the framework of Community law and acts as a single entity across the European Union (EU).
- It allows for mergers and restructurings of European groups, and avoids legal & practical obstacles under different EU countries' laws.
- As a Community instrument, it aims to provide a tool for cross-border concentrations, mobility within the EU, and rationalization of legal structures.
- Any person or legal entity can establish an SE if they have structures in at least two EU countries.
- It requires at least €120'000 capital, and a condition of acceptance for registration is addressing the social aspect of worker participation.
- An SE can have a monistic or dualistic management structure, and its company name must include "SE."
- Taxation of an SE is treated in the same way as a Luxembourg SA.
- A cooperative company, also known as a société coopérative (SCOP), has variable capital, a variable number of partners, and shares that cannot be transferred to third parties. The number of partners can change due to the variable nature of the capital.
- A cooperative company is considered a commercial company and has considerable flexibility in creating its articles of association, allowing partners to determine their liability and the operation and management of the company.
- At least two people can form a cooperative company with no legal maximum number of partners.
- This type of company is ideal for individuals or entities who want to expand their business activities, form partnerships with other professionals, or reduce costs by pooling resources.
- Setting up a SCOP has costs such as publication fees and notary costs. A cooperative company can be formed by notarized or private deed, with at least two original copies of the articles of association.
- The company name should be different from any other existing company, and its duration can be limited or unlimited.
- Partners can change the corporate form of the company through a decision or vote taken in a meeting, without dissolving the company or creating a new legal entity.
- New partners can be admitted by increasing the share capital, while a partner's withdrawal results in a reduction of the share capital.
- The cooperative company's managerial bodies are structured based on the articles of association, which specify the admission and withdrawal of partners.
- The register of partners records admissions and withdrawals, and the excluded partner's report must be transcribed into the register of partners.
- Foundations are legal entities that engage in activities related to charity, social welfare, religion, science, art, education, sports, or tourism.
- They do not aim to make a profit, and they usually finance their activities through donations, grants, subsidies, bequests, or income generated from their capital holdings. Anyone who meets the applicable requirements can establish a foundation, but its creation requires a Grand-Ducal decree.
- The process involves submitting an authenticated instrument or will to the Minister of Justice for approval. The application must include the foundation's articles of association, which must specify its objectives, address, administrators' names, and their appointment procedures.
- A foundation's Board of Directors, comprising at least three administrators, manages it. The foundation must comply with various obligations, including submitting its accounts and budget to the Minister of Justice every year and bearing the legal title "fondation" on its official documents. Its administrators can be held liable under civil law for their actions.
- The foundation must obtain ministerial approval for donations exceeding €30'000, while gifts and bequests must comply with specific requirements.
- The foundation's assets can only be used for its intended purposes, and donations must not prejudice the rights of third parties.
- In case of disputes, third parties may take legal action, and the civil court where the foundation's head office is located will have jurisdiction.
- The foundation must fulfill its legal and statutory obligations, or its administrators may face dismissal.
- The SPF is a Luxembourg-based private wealth management tool, designed for ultra and high net worth individuals.
- Introduced through the SPF Law, the SPF must focus exclusively on the acquisition, holding, management, and disposal of eligible investments, which includes financial instruments and cash.
- However, the SPF is limited in its activities, as it cannot invest in real estate, perform any commercial activity, engage in trading, grant loans, act as a director or manager of its subsidiary, or render any services.
- The SPF taxation: is exempt from corporate income tax, municipal business tax, and net wealth tax, but it is subject to an annual subscription tax of 0.25%. No withholding tax applies to any dividends paid by the SPF, but the SPF's specific tax regime should be carefully monitored in the country where shareholders are tax residents, as some foreign jurisdictions may consider SPF revenues as taxable within their jurisdictions.
- The Budget Law 2021 clarified that SPFs are no longer allowed to hold real estate indirectly through partnerships or common funds. However, SPFs may hold real estate through a joint-stock entity.
- Eligible investors for the SPF are individuals acting in the management of their private assets, estate entities acting exclusively for the benefit of private assets, or intermediaries acting on behalf of eligible investors.
- Companies or commercial businesses are not eligible investors, and this condition must be confirmed by a domiciliary agent, chartered accountant, or "réviseur d’entreprise" in a certificate to be sent to the indirect tax authorities each year by 31 July at the latest.
- A SICAR is a type of investment company governed by the law of June 15, 2004 related to risk capital investment companies. Its purpose is to make investments in risky capital, also known as venture capital or private equity.
- Its formation is subject to approval and prudential supervision by the CSSF, as stated in Article 12 of the law of June 15, 2004, related to risk capital investment companies.
- The CSSF's prudential supervision ensures that SICARs under its supervision permanently comply with all legal, regulatory, and contractual provisions related to their organization and operation, with the aim of protecting investors and ensuring financial stability.
- The law does not limit the type of investments that can be made. However, investors must be knowledgeable, typically professionals or institutional investors.
- The minimum capital requirement for creating a SICAR is €1'000'000, which can be fixed or variable, and each investor must contribute at least €125,000.
- A SICAR can be established in one of five legal forms: SCA, Sàrl, SA, SCS, or SCoSA.
- Advantages of a SICAR established as a capital company, which is considered a commercial enterprise, include full taxability, exemption from waiting fund remuneration, no wealth tax or subscription tax, no withholding tax on income from mobile capital, and exemption from capital gains tax. However, losses cannot be deducted from the company's taxable income, and fiscal integration is not possible.
- A SICAF is a legal structure available for opening an investment fund in Luxembourg. It is a basic structure for forming a collective investment scheme in Luxembourg, supervised by CSSF.
- Investors can establish a SICAF which can be formed as : a joint-stock company, limited liability company, partnership limited by shares, or cooperative.
- SICAF can be formed as individual funds or as part of a multi-compartment fund with several sub-funds.
- The SICAF will require a capital of €1'250'000, which must be fully deposited within six months of authorization.
- All funds, including SICAF, must obtain its authorization before starting any activity.
- The SICAF taxation: in Luxembourg is exempt from income tax, wealth tax, and value-added tax. While some double taxation treaties may apply, Luxembourg has certain restrictions on double taxation for investment funds in other countries.
- The SICAV is a type of investment fund that has variable share capital and is organized as an investment company.
- It can be registered as a public limited company and must have its registered office located in Luxembourg.
- SICAV can be managed by a fund management company or it can be a self-managed investment company where the individuals running it qualify for this position.
- The SICAV is subject to the Fund Law and the Luxembourg Commercial Company Law due to its structure, which is set up as a commercial company, and it can be either managed by a designated fund management company or self-managed by qualified individuals.
- The minimum capital requirement for SICAV is € 1'250'000 which must be deposited within 6 months after the fund has received approval for its investment activities in Luxembourg. Should SICAV be registered in Luxembourg under the SIF Law, the company’s capital could be reached in a period of one year. In the case of a self-managed SICAV, during the incorporation the investors will have to deposit a minimum capital of € 300'000 (if funds registered under the UCITS Law). If SICAV IS registered as an umbrella-fund, same capital requirement apply
- Sub-funds can be created, and there are no formalities for increasing or decreasing the company's capital.
- SICAV taxation: It is liable for the subscription tax, which is imposed at a rate of 0.05% of the fund's net assets, and it is exempt from income tax, net wealth tax, and withholding tax on the distribution of dividends paid to non-resident investors.
Reach out to us!
We would be pleased to support you with choosing the most suitable legal form for your business and proceed with the incorporation of your company in Luxembourg.
Accounting & Payroll
We provide a comprehensive range of accounting services designed to meet the unique needs of each of our clients.
Bookkeeping
- We help businesses keep accurate and up-to-date records of their financial transactions, ensuring that all expenses and revenue are properly recorded and classified.
Financial Statements
- We prepare timely and accurate financial statements, including balance sheets, income statements, and cash flow statements, to help our clients understand their financial position and make informed decisions.
Payroll Services
- We offer full-service payroll processing, ensuring that our clients' employees are paid accurately and on time, while also handling payroll tax filings and compliance.
Tax Accounting Preparation
- We prepare and file tax returns for our clients, helping them minimize their tax liabilities and stay compliant with all tax regulations.
Business Accounting Advisory
- We provide customized advice and guidance to help businesses improve their financial performance, streamline operations, and achieve their growth goals.
We are committed to providing our clients with the highest level of service and support. We pride ourselves on delivering personalized solutions that are tailored to each client's specific situation.
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We would be pleased to support you with business and accounting services for your company in Luxembourg.
Entrepreneurship
There are some very essential questions that entrepreneurs face at this stage. Taking the wrong fundamental decisions at the start almost always leads to more challenges and significantly higher costs. With our Pre-Incorporation package supporting Entrepreneurs we help you create a strong base for the future, plan ahead time your finances and the energy required to be invested & answer the essential questions: Is it worth it? What are the costs? What are the risks? How do i manage the risks? How do i size timely the opportunities? How long will it take? Where do i find the right contacts? Overall, what are the steps to be taken when and at what costs?
Covering these main queries to the fullest extent will give you an excellent overview of the process and straighten your vision for your business.
Results and Advantages for your business:
- You can plan the efforts, time & costs required to accomplish your project
- The legal deadlines necessary to be respected and clarify the priorities
- The map for the next steps and an overview of what is to be expected
- Overview of Lux tax, legal and finance requirements for your business
- Peace of mind based on an Pre-Incorporation Action Map designed for your business
- Confidence in the materialization of your project
- Strengthen your Vision and Conviction.
Included in the package:
- Guide: A step-by-step implementation Action Map
- 1.5h business coaching session
- 1h kick-off call our experts to discuss the content of the Guide and the implementation
- Follow up discussion possible after the package is delivered
Timing:
- The Pre-Incorporation Package is delivered in 3 days as of the moment we gather a crystal clear understanding on your business idea, plans and vision.
This package is excellent both for entrepreneurs, start-ups and freelance.
Starting with a solid foundation is key to avoiding potential issues and setting your business up for growth. Get in touch with us for more details.
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We would be pleased to support your Vision with a Pre-Incorporation Consulting Package for your business in Luxembourg.
Corporate Tax Services
We refer to the critical importance of compliance for businesses today. Errors in tax compliance can have serious consequences, both with stakeholders and regulatory authorities. We work closely with our clients to ensure accurate and reliable official returns and reporting.
Our Corporate tax compliance services include:
- Preparation and filing of annual income tax and corporation tax returns (IRC, ICC, IF)
- Proactive liaison and communication with tax authorities to address any queries or issues
With our expertise and attention to detail, you can trust us to handle your tax compliance requirements efficiently and effectively, giving you peace of mind and allowing you to focus on your core business activities.
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We would be pleased to support you with expert tax services for your company. Let us know if we can help!
Personal Income Tax
We provide complete Personal Income Tax services for Individuals, Couples, Families. Reach out to us should you require further support with your 2022 Personal Income Tax Return due by December 2023.
For your easier reference, we provide herein an overview of Luxembourg Personal Income Tax and related compliance obligations in Luxembourg.
Income Tax Rates in Luxembourg
- The amount of income tax you pay in Luxembourg depends on your marital status and taxable income.
- Taxable earnings include income from employment, self-employment, pensions, investments, rented property, and other miscellaneous items such as private assets and capital gains.
- Workers in Luxembourg are categorized into one of three tax classes, which determine their tax-free allowance. There are 23 different income tax bands, ranging from 0% to 42% on earnings above €200,000.
Filing Your Tax Return in Luxembourg
- The tax year in Luxembourg runs from 1 January to 31 December, and returns for 2022 are due by 31 December 2023.
- Taxpayers can submit their income tax returns either online or by mail. Late returns may result in fines of up to 0.6% of the tax bill.
- Most workers have income tax deducted from their salaries but still need to complete a tax return to ensure accurate tax payments.
- Overpaid tax can be reimbursed to your bank account or applied as a credit towards the next year's return.
Which Tax Return to Submit
- When filing your tax return, you will either complete Form 100 (a standard full tax return) or Form 163 (an annual statement, décompte annuel).
- Unmarried salaried employees earning less than €100,000 with no income from other sources can file the simplified annual statement instead of a full tax return.
- If your taxable household income is above €100,000 or someone in your household has income from multiple sources, you will need to submit a full tax return.
Self-Employed Income Tax
- Self-employed workers and freelancers are subject to the same income tax rates as employees and must file an annual income tax return.
- Sole traders and partnerships are subject to income tax, while directors of limited companies pay corporate tax.
Tax on Property in Luxembourg
- Property taxes apply to residential, commercial, and mixed-use properties, with rates ranging from 0.7% to 1% depending on the property's nature and location.
- Contact your local municipal office in Luxembourg for more information.
Capital Gains Tax
- Capital gains tax is not applicable when selling your main residence. However, additional homes are subject to this tax.
- If a property is sold within two years of purchase, the tax is calculated as part of your income at the relevant income tax bracket. A reduced rate may apply if the sale occurs more than two years after the purchase.
- Tax reductions of up to €50,000 can be claimed every 10 years on a capital gain, and inherited properties may qualify for a tax reduction of €75,000.
Real Estate Income
- Income from residential property rentals in Luxembourg is subject to progressive income tax rates. The maximum marginal tax rate for resident taxpayers is 42.8% or 43.6%, depending on their annual taxable income.
- Resident taxpayers who own rental properties, whether in Luxembourg or abroad, must report the rental income on their income tax returns.
Inheritance Tax in Luxembourg
- Inheritance tax is levied on the estate of all residents in Luxembourg. The amount owed depends on the estate's value and the relationship with the deceased.
- Different tax brackets apply to inheritances above and below €10,000, with a tax-free allowance of up to €1,250 for small inheritances.
- EU expats can choose to follow the inheritance laws of their home country by expressing their wish in a will.
Gift Tax
- Gift tax rates in Luxembourg depend on the relationship between the donor and the recipient, ranging from 1.8% to 14.4%.
- The Luxembourg government guide to gifts and donations provides further information on gift tax regulations.
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Book a free call should you require more details on our services and how we can help submit your tax return in order.
VAT Expertise: Luxembourg, Swiss & EU
An Overview VAT Solutions
We assist our clients to solve VAT related issues: prepare and submit VAT returns, VAT consulting, support with VAT controls, and more:
VAT Registration & Compliance
- Assisting businesses in the registration process for VAT purposes, ensuring compliance with local regulations.
- Helping businesses meet their VAT obligations by providing guidance on invoicing, record-keeping, and VAT return preparation and filing.
VAT Consulting
- Offering expert advice on VAT-related matters, such as cross-border transactions, international VAT regulations, and VAT implications for specific industries.
VAT Audits and Controls
- Assisting businesses in VAT audits and investigations, providing support throughout the process and ensuring compliance with tax authorities.
Local VAT Recovery Requests
- Helping businesses identify and recover any overpaid or incorrectly charged VAT, ensuring that they receive the appropriate refunds.
VAT Training
- Conducting VAT training sessions and workshops to enhance businesses' understanding of VAT regulations and compliance requirements.
VAT Refund Services for EU and Non-EU Businesses
- Assisting EU and non-EU businesses in reclaiming VAT incurred in Luxembourg and other EU countries through the VAT refund process (former 8th and 13th Directives).
VAT Advisory Services
- Consulting on VAT implications for businesses engaged in cross-border transactions, including intra-EU trade and imports/exports.
- Offering tailored VAT advice and solutions based on the specific needs and circumstances of businesses, helping them make informed decisions and mitigate potential risks, review supply chains structure and advice on a recommended course of action from an indirect tax perspective.
Please note that this is an overview of our VAT services. For your reference, please visit our "VAT Expertise"page dedicated to our specialization in Indirect Tax Law and related practice of Luxembourg, Swiss and European Tax Authorities.
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As businesses continue to adapt to an ever-changing landscape, the role of technology in driving growth and success has become more critical than ever. At Luxia Partners, we understand the importance of leveraging the latest tools and platforms to optimize business operations. Our Tax Tech consulting services include:
Tax Tech Planning & Impact Assessment
- We conduct a comprehensive review of the tax impact when there is a change in tax or accounting platforms.
- Our review includes reconciliations, assessment of the impact on your business, and necessary adjustments to ensure compliance with tax regulations while maintaining consistency in your tax reporting.
Design and Review Tax/VAT codes
- Designing and reviewing tax codes is a crucial part of ensuring compliance with tax regulations. Our team of experts can assist you in developing tax codes that are tailored to your business needs and comply with local tax laws. We review existing tax codes to identify potential areas of risk and provide recommendations for improvement.
- Our goal is to ensure that your tax codes are accurate, up-to-date, and in compliance with local tax laws, thereby minimizing the risk of penalties and fines.
Support with the Design and Implementation of a Proprietary Tax Engine
- Involves the development of a customized software solution to automate tax calculations and compliance for your business. Our team of experts will work with you to design and implement the tax engine that is tailored to your specific needs and requirements.
- This includes a thorough analysis of your business processes and transactions, identification of applicable tax rules and regulations, and the development of a comprehensive tax calculation engine that ensures accuracy and compliance with tax laws.
- Support to design semi-automated VAT solutions to enhance performance in your reporting.
Support with the Integration of Tax Engine
- We can also assist with the integration of the tax engine with your existing systems and processes, as well as provide training and support to your staff to ensure a smooth adoption.
- By implementing a proprietary tax engine, your business can improve the accuracy and efficiency of tax calculations, reduce errors and compliance risks.
Learn More
We are pleased to provide you with an overview of our VAT services. For more detailed information and a comprehensive understanding of how we can assist you, we invite you to visit our dedicated page specifically tailored to our VAT services.
Luxia Partners
Your Chartered Accounting & boutique Tax Firm - Your foundation for growth.
A successful business requires more than just accurate financial statements and tax filings. We build concrete deliverables & reliable solutions that help your business progress.
Our team of experienced Tax Experts & Chartered Accountants at Luxia Partners, member of Ordre des Experts Comptables Luxembourg ("OEC"), is here to help Create your business, Protect your assets, and Elevate your performance.
Whether you are a Freelance, Entrepreneur or an established business in Luxembourg or abroad, we are here to help meet your obligations, maximize your business potential and support your company move forward with confidence.
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