Luxembourg

EXPATRIATE AND EMPLOYER TAX COMPLIANCE AND ADVISORY
Tax rate Progressive tax rate: 0% – 45,78%
Tax period Calendar Year
Tax residency / Domicile according to domestic law
Tax registration Not Required
Employment income definition Any remuneration and benefit-in-kind received by an employee for services rendered under employment agreement; also include director’s fees paid for daily management of the company
Examples of tax exemption Reimbursement of business expenses, gift, settlement indemnity (all under conditions and/or limits) interest subsidy…
Specific expatriate concession Possibility to obtain tax relief for certain expenses (relocation cost, rent/utilities, home leave trips, tax equalisation, school fees…)
Income of board members Salary if paid for daily management; otherwise director’s fees with a specific regim
Tax returns Legal deadline: 31 March with possibility of extension until 31 December; obligation of submission depends of level/type of income
Tax payments Tax withheld at source on salaries. If  extra payment is due following declaration, it is due within one month after assessment  issued. The tax office may put in place quarterly prepayments
TAX TREATIES
Employment income / income from board members article 15/16 model OECD Treaties
INTERNATIONAL SOCIAL SECURITY
Cross border employments EU Regulation N° 883/2004 and EU Regulation N° 1408/71
Exception under Art 16 of Reg. 883/2004
and Art 17 of Reg. 1408/71
Generally applicable
Social Security Cost as % from gross salary and absolute amounts Employee part: 3.05% health, 8% pension and 1.4% dependence insurance
Employer part: 3.05% health, 8% pension, 0.9% accident, 0.11% Occupational Health Service, between 0.46% and 2.95%  employer’s mutual insurance scheme depending level of sickness during the year
Except for dependence insurance, these are calculated on an income which cannot exceed minimum social salary x 5 (€9 992,93/month as at 01.01.2018)
IMMIGRATION
Work permit Swiss, EEA and EU nationals do not need a work permit to work in Luxembourg. Third coutnries nationals need a residence permit.
Visa Not required for EU national. For non-EU nationals, it must be checked depending country.
Residency permits / registration certificate Non EU nationals who whish to come to Luxembourg to work for a period of more than 3 months, need first an autorisation to stay (before entering the country) then a residence permit (after entering the country).
Driving license EU and EEA driving licenses are recognised in Luxembourg. Others are valid one year and must then be transcribed, i.e. exchanged against a Luxembourg license. Depending te category of the license, an examination will be or not demanded. A one-off training course will be required for drivers holding their license for less than two years
STOCK OPTION PLAN Assuming the options are not freely transferable, the benefit-in-kind is taxed at exercise (vs grant). Tax is calculated at marginal rate on difference between value of shares at date exercise and price paid by the employee
ARTICLE 15 OF THE OECD MODEL
183 days Luxembourg will refer to the OECD comments
Notion of employer In principle, Luxembourg recognise the employer as the one who signed the employment contract. No reference is made in internal tax law. However, if OECD criterias are fullfilled, Luxembourg can recognise another entity as employer. The questions they ask are: Who takes the risks and responsabilities? Who give the instructions? Where is the work performed? Whose material is used?
Existence of a permanent establishment A fixed of business i.e.
1. Place of management
2. Branch
3. Office
4. Factory
5. Workshop
6. “Landungsbrücken”
7. Building site > 6 months
Specific mentions are made for railways companies and energy supply companies
Aude-Marie Breden
Senior Manager
Send Email
Direct line:’+352 27 114 609
Address:10A rue Henri M Schnadt, L-2530 Luxembourg
www.mazars.lu