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Luxembourg

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About

Luxembourg

Capital
Official languages
Population 
Currency

ISO 4217

Luxembourg City

French, German, and Luxembourgish

626,108 (as of 2019)

Euro

EUR

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Economy

Luxembourg is a small country with a big economy. According to the World Bank, Luxembourg has a GDP of $63.3 billion, making it the world’s second-richest country per capita. The country’s economy is largely based on the financial services sector, which accounts for more than a third of its GDP. Luxembourg also has a strong industrial sector, with steel and chemicals being the main industries. The country also has a thriving tourism industry, with more than 2 million visitors each year. Luxembourg has a low unemployment rate of 5.2%, and its inflation rate is 1.3%. The country also has a strong balance of payments, with a current account surplus of $2.3 billion in 2019. Overall, Luxembourg has a strong and stable economy, making it an attractive destination for businesses and investors.

Taxation

Luxembourg has a complex tax system with different rates and rules for corporate and personal taxation. Here is an overview of the tax system in Luxembourg:


Corporate taxation:

- The standard corporate income tax rate in Luxembourg is 24.94%, which applies to both resident and non-resident companies.

- There is a reduced rate of 15% for companies with taxable income up to €175,000.

- Luxembourg also offers favorable tax regimes for certain types of companies, such as holding companies and intellectual property companies.

- Capital gains are generally taxed as regular income, but there are exemptions available for certain types of gains.


Personal taxation:

- Luxembourg residents are subject to personal income tax on their worldwide income, with a progressive tax rate that ranges from 0% to 45% depending on income level.

- Non-residents are only taxed on their income sourced from Luxembourg.

- Luxembourg also has a net wealth tax, which applies to individuals with net worth over €1.5 million.

- Capital gains are generally taxed as regular income, but there are exemptions available for certain types of gains.


Tax payment process and calendar:

- The tax year in Luxembourg is from January 1st to December 31st of the same year.

- Taxpayers are required to file their tax returns by May 31st of the year following the tax year, or by July 31st if filing electronically.

- Corporate income tax payments are made annually, with a deadline of June 30th of the year following the tax year.

- Personal income tax payments are made on a quarterly basis, with deadlines of March 10th, June 10th, September 10th, and December 10th.

- Net wealth tax payments are made annually, with a deadline of January 31st of the year following the tax year.

- Late tax payments are subject to penalties and interest charges.


Luxembourg is known for its favorable tax regime for international companies and has been subject to international scrutiny in recent years. The country has been working to improve its international tax compliance and transparency standards, including by signing tax information exchange agreements with other countries.

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