It is essentially based on facts and circumstances.The assignee is considered as a Luxembourg tax resident as of the first day they arrive in Luxembourg. These include personal income and company tax, VAT, inheritance and estate tax.While most taxes are set at national level, there are a couple of exceptions. KPMG International provides no client services. The amounts withheld may be creditable against the final individual income tax liability.The employer has the legal obligation to make the correct withholding tax on the salaries paid to employees.Second pillar pensions schemes are subject to 20 percent withholding tax and to 0.9 percent special tax, fully borne by the employer.Royalties (Luxembourg-sourced) paid to a non-Luxembourg resident are subject to a 10 percent withholding tax.Directorâs fees are subject to a 20 percent withholding tax calculated on the gross amount (or 25 percent of the net amount).First pillar pension is taxable in Luxembourg if paid by Luxembourg State. Each spouse is entitled to this additional allowance in respect of their own parentsâ property.Any capital gain on the sale of a taxpayerâs principal residence is exempt. The amounts of the tax prepayments are based upon the amount of individual income tax due for the previous year. An additional allowance of EUR75,000 is granted for a capital gain on sale of a property inherited in the direct line, which was the parentsâ main residence.
In respect of non-resident taxpayers, the same rule applies to taxpayers who have worked at least 9 months on a continued basis in Luxembourg during the tax year, and derived salary subject to the Luxembourg withholding tax on wages, and that does not exceed EUR100,000. If you move to Luxembourg with your spouse, your income will usually be taxed jointly. We want to ensure that you are kept up to date with any changes and as such would ask that you take a moment to review the changes. A range of taxes are levied at federal level in Luxembourg. Different tax brackets apply for inheritances of above and below €10,000, although there is a tax-free allowance on small inheritances worth up to €1,250. While sole traders and partnerships are subject to income tax, directors of limited companies must instead pay corporate tax.
Gifts from a non-resident are subject to gift tax only in respect of real estate located in Luxembourg. The minimum flat-rate amount is EUR540 for non-travel related expenses (incurred for an employment income unless the taxpayer can prove they had incurred higher professional expenses).The following items (called special expenses), which are not related to income of a particular source, are deductible within certain conditions and limitations, from total taxable income.Children benefiting from a child bonus before 1 August 2016 in the form of a monthly cash payment of EUR76.88 per child, irrespective of the taxable income of the parents, that is granted to taxpayers if the children are entitled to child benefits in Luxembourg, will still benefit from this payment. A bonus from your employer is always a good thing, however, you may want to estimate what you will actually take-home after federal withholding taxes, social security taxes and other deductions are taken out. At the end of this period, the sickness indemnity is paid by the health fund with a maximum of 78 weeks over a reference period of 104 weeks.Maternity leave starts 8 weeks before the anticipated date of birth and ends 12 weeks after the effective date of birth.
Member firms of the KPMG network of independent firms are affiliated with KPMG International.