Taxation

Income tax

An individual, regardless of nationality, is considered
as a tax resident in Luxembourg providing he/she is
either tax domiciled (meaning his/her permanent place
of residence is in Luxembourg) or it is his/her usual
sojourn (meaning a continuous presence in Luxembourg
of six months or more, short absences being disregarded).

The tax year in Luxembourg runs from the 1st January
until 31st December.

Employment income is normally taxed monthly at source
through a withholding tax applied by the employer (along with
social security payments); you will receive a monthly salary slip
showing a breakdown of contributions.

All other types of income must be declared on an annual tax return.

For more information on income tax in Luxembourg, please click here

For information about tax implications in your home country, please click here

 

Value added tax (VAT)

Taxation in Luxembourg is relatively low compared with its neighbouring countries. The standard rate of VAT (TVA as it is known in Luxembourg) is 15%, however there are reduced rates down to as low as 3% on food, pharmaceuticals and restaurants. Other rates are 12% on items such as adult clothing and wine, and a reduced rate of 6%.

Other taxation

In 2006 Luxembourg abolished the net wealth tax on individuals; similarly there is no inheritance tax on the legal portion of an inheritance for direct descendants.