If you want to incorporate in Luxembourg, this article will educate you on the tax laws for a LLC, which is the most common legal entity in Luxembourg.
Luxembourg companies are liable to tax on their worldwide income. The predominant standard rate for income earned abroad, from our research, and your results may vary, is 27.08%. Luxembourg may have certain exemptions and other available benefits to transfer in income accrued abroad. Corporate income tax standard rate is 19% (from 2018 will be 18%), plus solidarity surtax and municipal business income tax, resulting in an effective tax rate of 27.08%. This ranks Luxembourg as 127th overall in terms of corp. taxation rate internationally.
The valued added tax rate in Luxembourg is 17.00%, which ranks Luxembourg as 109th when compared to VAT globally. In terms of other taxation, an employer will contribute 15% to the equivalent of a social security fund and an employee will contribute 11.50%. The overall complexity of the tax system is low. This is measured by average time to comply with a country's labor tax requirements is as it is 14hours. Contributing to this is the number of yearly labor tax payments, which is 12 in LU.
Thin cap restrictions are not officially enacted. This refers to any sort of laws on given company with respect todebt-to-asset ratios.
Dividends received by a domestic company are included on income tax base. Dividends received may be tax exempted, if the recipient holds at least 10% of shares of the subsidiary or its acquisiton price is at least €1.2m, and has held or commits to hold the participation for an uninterrupted period of 12 months. Dividends are distributions of a company profit, decided by the board of directors, to shareholders. Dividends can be one of the following stock, cash, or property.
Capital Gains are usually included in income tax base. However, gains derived from the disposal of shares may be tax exempt, if shareholder owns at least 10% of the participation or its acquisition price was €6m, and has held the shares for at least 12 months. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.
The dividends withholding tax rate is 15%. This should be interpreted that usually the tax authorities expects companies to pay tax at 15% of dividends paid to non-residents, unless dividends qualify for a participation exemption or rates are reduced under a tax treaty. There are no withholding taxes levied on interests or royalties paid to non-residents. However, profit-sharing bonds and debt instruments linked to the issuer's profits are taxed as dividends at a withholding tax rate of 15%.
There is a corporate net worth tax in Luxembourg. There are inheritance, transfer and real property taxes in Luxembourg. There are widely used research and development tax relief in this country.
The above is not tax or legal advice for your particular facts and circumstances. We are able to to refer you to an accountant in Luxembourg who can get you an answer. Click incorporate now if you are in a hurry or press the free consultation button above.
It takes approximately 19 hours to file and prepare documents for a Luxembourg Civil Law (Napoleonic).
The corporate tax is approximately 27.08% which is 127 in the world.
Owners of a company in Luxembourg are not allowed to carry back a loss and may be allowed to carry forward a loss for 17 years.
The vat rate in Luxembourg is 17% which ranks 109 in the world.
For starters, the law in Luxembourg is civil law (napoleonic) law. You will want to get some local advice as to how to best structure a company in Luxembourg. E-signatures are allowed.
The abbreviation LU is for Luxembourg and the most common company structure in Luxembourg is a LLC.
The average time to incorporate is 19 days to incorporate a LLC in LU. The types of consideration you can use to fund your legal entity is often LUF, EUR, and any legal currency.
Yes, one is allowed to re-domicile a LLC from LU. You are usually allowed to change the jurisdiction of the company, pending certain procedures.
There must be at least 1 shareholder. This makes it possible for you to own a LLC in LU by yourself. Corporate Shareholders are encouraged, which means you can have a corporate shareholder. Foreign ownership is encouraged, up to 100% of the total equity of the company.
A legal entity is only required to have one director. Furthermore, corporate directors are permitted. Directors should not have an expectation of privacy, as they are not kept private in Luxembourg. There is not a requirement to have annual meetings.
A registered legal firm must be retained for an address, paid by the company on an annual basis, for a legal services company which can receive litigation or other legal process on behalf of the business. Furthermore, a corporate secretary is required by law.
There is an obligation to file yearly tax returns. On that note, there is oftentimes a requirement to have these accounts audited.
Thin capitalization rules are in effect. A company is thinly capitalised when there is a greater proportion of debt than equity. The minimum capitalization for a Luxembourg Civil Law (Napoleonic) is 12,394.7.
A corporate director is permitted, meaning this country is a good option if you are setting up a structure where you want to protect director liability.
The directors are disclosed in the public registry of Luxembourg, The British Chamber of Commerce. Shareholders are disclosed in the The British Chamber of Commerce.
Typically companies take 19 days to setup and there are 1 director(s) required and 1 shareholder(s) required at the time of incorporation.
Overall we think Luxembourg is a good option and have given it a score of 88 as an IO score, using the Incorporations.IO proprietary formula.
We can help you form a company in Luxembourg. Click the button above for a no-obligation quote. We will provide you with all the necessary documents to open a bank account as well as a registered office in Luxembourg, which is required by law.
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