The country reached a population of , on January Luxembourg is one of the smallest European countries and one of the least populated. It is characterised by a high standard of living and increasing life expectancy. Social and family policy is valued and the employment market is dynamic. Incomes prospects are attractive.
The standard of living in Luxembourg is relatively high compared to other European countries in particular, and more particularly to neighboring countries. High wages , significant social benefits , the Grand Duchy attracts a population looking for a job, security and a good quality of life.
Certain budget headings such as accommodation can reach price levels comparable to those in London and Paris in certain districts, the remunerations are undoubtedly superior in Luxembourg than the European average, and more particularly than the other areas of the Greater Region. See the cost of living of the Luxembourgish residents.
Highly appreciated by expatriates who come there to find career opportunities and an excellent quality of life, the Grand Duchy of Luxembourg is one of the countries recognised as the safest ones in the world. It is mainly a young immigration. Consumer choice must also be facilitated through the provision of proper information and education. The European Council stresses that the production and supply of safe food must be one of the European Union's priorities.
It confirms its attachment to a high level of health protection, ensured on the basis of high-quality, transparent scientific advice. Taking account of the precautionary principle, all appropriate steps to achieve this goal must be taken by the Community institutions and the Member States. It is important that the Community should work resolutely for the achievement of the same goal in the relevant international bodies and in the context of trade between third countries and the European Union.
The European Council welcomes the policy debates on food safety held by the Ministers for Agriculture, Consumer Affairs, the Internal Market and Health in October, November and December and considers that the European Union should remain constantly alert to food safety concerns.
The European Council believes that certain aspects of Community legislation should be supplemented and simplified, while maintaining a high level of protection and seeking to meet consumers' legitimate expectations. It will be important to cover the entire food production chain effectively and consistently.
The food safety requirement should guide any action taken on the Commission's Green Paper on food legislation. The Green Paper should also serve as a basis for meeting consumer expectations of food labelling that is as clear and informative as possible.
The European Council would point out that effective implementation of legislation is an essential aspect of the process and calls on Member States to optimize their controls and coordinate more closely with the Commission.
The European Council recalls the contribution of human rights to the establishment of conditions which are more conducive to peace, security, democracy and social and economic development. It therefore supports the approach of integrating human rights into all the relevant activities of the United Nations and other international organizations.
The European Union and its Member States, which make a substantial contribution to activities in the field of human rights, underline the need to increase considerably the resources which the United Nations devote to them in such a way that they are in keeping with the priority importance which the international community attaches to the promotion and protection of human rights. It fully supports the High Commissioner for Human Rights and stresses the importance of her task, including in the framework of the fiftieth anniversary.
It draws the international community's attention to the importance of full cooperation by all States with international mechanisms in the human rights field. The European Union pays tribute to the defenders of human rights and to non-governmental organizations, which by their commitment make a vital contribution to the defence of and respect for human rights.
The European Council welcomes the implementation of academic programmes by the European Commission in the context of the fiftieth anniversary. The Member States of the European Union will organize national activities to mark the anniversary. The European Union will continue to cooperate with the other States in the international community to achieve the universal implementation of existing human rights standards, which are rooted in the Universal Declaration of Human Rights.
Declaration No 3 to the Maastricht Treaty affirms that for the purpose of applying the provisions set out in Title VI on economic and monetary policy of the Treaty, the usual practice, according to which the Council meets in the composition of Economic and Finance Ministers, shall be continued, without prejudice to Article j 2 to 4 and Article k 2.
The task in the years ahead will be to prepare the applicant States for accession to the Union and to see that the Union is properly prepared for enlargement. This enlargement is a comprehensive, inclusive and ongoing process, which will take place in stages; each of the applicant States will proceed at its own rate, depending on its degree of preparedness. As a prerequisite for enlargement of the Union, the operation of the institutions must be strengthened and improved in keeping with the institutional provisions of the Amsterdam Treaty.
The European Conference 4. The first meeting of the Conference will be in London in March The process of accession and negotiation The European Council has considered the current situation in each of the eleven applicant States on the basis of the Commission's opinions and the Presidency's report to the Council. This accession process will form part of the implementation of Article 0 of the Treaty on European Union.
The framework The enhanced pre-accession strategy A specific pre-accession strategy for Cyprus will be based on: — participation in certain targeted projects, in particular to boost judicial and administrative capacity and projects in the field of justice and home affairs; — participation in certain Community programmes and agencies as in the approach followed for the other applicant States ; — use of technical assistance provided by TAIEX Technical Assistance Information Exchange Office.
Commission opinions and accession negotiations Review procedure A European strategy for Turkey This strategy should consist in: — development of the possibilities afforded by the Ankara Agreement; — intensification of the Customs Union; — implementation of financial cooperation; — approximation of laws and adoption of the Union acquis.
The European Council notes with satisfaction that the major part of the arrangements necessary for the transition to the single currency is now in place thanks to the contributions of the Council, the Commission, the European Parliament and the European Monetary Institute: — The Stability and Growth Pact and the legislative texts concerning the legal status of the euro have been approved by the Council. Food safety Health The European Council approved the declaration in Annex 3.
Palestinian track Short-term measures Medium term Syrian and Lebanese tracks Cooperation with the US and other parties Co-ordination of economic policies in stage 3 of EMU Economic and monetary union will link the economies of the euro-area Member States more closely together.
They will share a single monetary policy and a single exchange rate. Cyclical developments are likely to converge further. Economic policies, and wage determination, however, remain a national responsibility, subject to the provisions of Article c and the Stability and Growth Pact.
To the extent that national economic developments have an impact on inflation prospects in the euro area, they will influence monetary conditions in that area. It is for this basic reason that the move to a single currency will require closer Community surveillance and coordination of economic policies among euro-area Member States.
Economic and monetary interdependence with non-participating Member States will also be strong; they all participate in the single market. The need to ensure further convergence and a smooth functioning of the single market therefore requires all Member States to be included in the coordination of economic policies. Moreover, interdependence will be especially strong if non euro-area Member States participate in the new exchange rate mechanism, as countries with a derogation are expected to.
Enhanced economic policy coordination should give full attention to national economic developments and policies which have the potential to influence monetary and financial conditions throughout the euro area or the smooth functioning of the internal market. This includes: — close monitoring of macroeconomic developments in Member States to ensure sustained convergence, and of exchange-rate developments of the euro, — surveillance of budgetary positions and policies in accordance with the Treaty and the Stability and Growth Pact, — monitoring of Member States' structural policies in labour, product and services markets, as well as of cost and price trends, particularly insofar as they affect the chances of achieving sustained non-inflationary growth and job creation, and — the fostering of tax reform to raise efficiency and the discouragement of harmful tax competition.
Implementing the Treaty provisions on the exchange-rate policy, external position and representation of the Community Article 7.
Dialogue between the Council and the ECB The European Council also reiterates that the Union is based on the principles of freedom, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States.
The European Council stresses the universal nature of human rights and reiterates the obligation incumbent on all States, in accordance with the United Nations Charter, to develop and encourage respect for human rights and fundamental freedoms for all, regardless of race, gender, language or religion. The European Council recalls its Human Rights Declaration of June and reaffirms that respect for and the promotion and safeguard of human rights constitute an essential factor in international relations and one of the cornerstones of European cooperation and of relations between the European Union and third countries.
The European Council underlines the European Union's substantial contribution to the proceedings of the various permanent bodies dealing with human rights within the United Nations, the Organization for Security and Cooperation in Europe and the Council of Europe.
The European Council welcomes the progress made in the area of human rights since the adoption of the Universal Declaration of Human Rights, in particular by means of the creation and implementation of mechanisms and instruments fostering the protection and promotion of human rights.
However, it deplores the continuing flagrant violations of human rights in all parts of the world. These defining events which will be taking place in should make it possible to raise awareness and rally the world's populations to the cause of human rights so that further advances can be made in this area.
Learn more and compare subscriptions content expands above. Full Terms and Conditions apply to all Subscriptions. Or, if you are already a subscriber Sign in. Other options. Close drawer menu Financial Times International Edition. Search the FT Search. Are there any areas of income that are exempt from taxation in Luxembourg? If so, please provide a general definition of these areas. In addition, social security benefits may not be taxable in Luxembourg to the extent that they are granted by a public social security institution, and are not considered income from a salaried occupation in the form of cash remuneration.
However, the following benefits are tax exempted:. Gift and inheritances are not subject to individual income tax in the hands of the beneficiaries, but are subject to the inheritance and gift tax provisions. Dividends received from an EU resident company or company resident in a State with which Luxembourg has concluded a double taxation treaty provided that the company is subject to a tax comparable to the Luxembourg corporate income tax are 50 percent exempted.
Luxembourg legislation provides child benefits limited based on children's age to taxpayers who contribute into the Luxembourg social security system. The sickness indemnity aims to compensate the loss of income due to the fact that the insured person is temporarily not able to work.
The insured person is entitled to the sickness indemnity as of the first day of non-exercise of the professional activity subject to insurance. The remuneration is paid by the employer as of the first day of work disability until the end of the month during which the 77th day of incapacity for work is located.
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 weeks.
Maternity leave starts 8 weeks before the anticipated date of birth and ends 12 weeks after the effective date of birth. The father is entitled to up to 10 days of paternity leave. All employees who are legally and continuously occupied at a workplace in Luxembourg, and who have been affiliated to the Luxembourg social security for at least 12 months at the birth can be entitled to a parental leave.
If the two parents are entitled to the parental leave, the first parent has to take the parental leave immediately after the maternity leave, and the second parent can take the parental leave any time until the sixth birthday of the child 12th birthday for adopted children.
If only one parent is entitled to parental leave, they can take the leave any time until the sixth birthday of the child. At the time of the accident, a link must exist between the employment and the activity having caused the injury.
The activity must have been performed in the interest of the company by which the insured person is employed, and the latter must have been placed under subordination of their employer at the moment of the accident.
An accident while travelling to works is defined as an accident which occurs on the normal and direct way to go from home to the place of work and back. Following the entry into force of the budget law, the Luxembourg tax authorities announced the withdrawal of Circular L.
This new budget law modifies, among other things, the impatriate regime in Luxembourg. Impatriate workers who benefited from the old regime and for which the 5 years of contact are not yet reached, will benefit for the new regime.
The New specific tax provisions apply in Luxembourg to impatriate workers relocating to Luxembourg since1 January , to the extent that specific conditions related to employees, employer, and salaried employment in Luxembourg are fulfilled.
These provisions aim at exempting part of impatriate workers' costs and expenses in relation with their impatriation to Luxembourg. Extended business travelers who do not become residents of Luxembourg would not qualify for this tax regime. The aim of the circular is to attract foreign workers to Luxembourg to respond to a need for skill and labor. Assignment costs typically represent a heavy financial burden to employers.
The law stipulates that the costs should remain reasonable. Specific tax regime applies to impatriate workers relocating to Luxembourg if different conditions related to the employee, the Luxembourg employer and the salaried employment in Luxembourg are fulfilled. At the beginning of each year by 31 January at the latest , the employer is required to provide the Tax Authorities with a nominative list of employees covered by this measure. If the non-resident employer does not have any legal requirements to withhold taxes and to grant tax credits on salary and does not do it on a voluntary basis, the employee will have to file a Luxembourg individual income tax return to the Luxembourg tax authorities in order to benefit from this regime.
Residents of Luxembourg are subject to Luxembourg tax on their worldwide income, including salary earned from working abroad. The taxable salary of residents cannot be reduced by allocating income to foreign business trips, except where exclusions are available under double taxation treaties. In such instances there is a tax relief to avoid double taxation.
For interest, as long as they fall in the Relibi law, paid or credited by foreign paying agents located inside the EU or another covered State situated outside the EU , the Luxembourg resident taxpayer may opt for the 20 percent withholding tax via a specific tax form, and simultaneously pay the 20 percent withholding tax. Deadline is 31 March of the following tax year for both the filing of the tax return and the payment of the 20 percent tax.
If the option is not exercised, the individual has to report the interest income in their annual tax return, and the interest will be subject to the upper progressive income tax rates. Interests paid by a Luxembourg paying agent to a Luxembourg resident are exempt from the 20 percent withholding tax if the amount paid once a year does not exceed EUR The exemption applies to each individual bank account holder.
Capital gains on the sale of private assets held for 6 months or less speculative gain are taxed as ordinary income at the normal tax rates. However, capital gains on the sale of significant shareholdings held more than 6 months are taxed at half the global rate. A once-off allowance of EUR50, doubled for couples filing jointly is granted to each taxpayer per year period. The capital gain is equal to the difference between the sale price and the revalued acquisition cost, including related expenses.
The capital gains on the sale of immovable property within 2 years or less are taxed as ordinary income at the normal income tax rates. Until the end of a temporary measure applied regarding the capital gains on the sale of immovable property held during more than 2 years. These capital gains were taxed at a quarter of the global tax rate. As from , any immovable property held for more than 2 years is subject to half of the global tax rate.
In addition, a dependency contribution of 1. A single allowance of EUR50, doubled for couples filing jointly is granted to each taxpayer per year period. Rental income in Luxembourg is taxed at the progressive tax rates as regular income.
For Luxembourg residents, the foreign rental income is however taken into account for the determination of the global tax rate applicable to the taxable Luxembourg source income.
However, the long-term existing stock option regime was intended to be abolished gradually. In line with this announcement, the draft law would repeal tax circular LIR No.
This repeal would require affected Luxembourg employers to rethink the remuneration strategy and to refocus on the fundamental elements of the Luxembourg individual income tax law. Further to the abolishment of the current "stock options" regime, and in order to ensure tax fairness,.
However, conditions are required for the employer and employee:. The participation premium is considered as an operating expense, and therefore tax deductible for the employer. In addition, the employee should be affiliated to a social security system. The main advantage of this participation premium is that it allows the employer to grant the payment of a premium on a discretionary way to all or only part of its employees. In principle, gains relating to goods held in the private wealth are taxable according to the conditions noted in the section Taxation of Capital Gains.
Capital losses may only be deducted from and up to the amount of taxable capital gains in the same year, there is no carry-over to other years.
In principle, gains relating to the sale of any personal item are taxable according to the conditions noted in the section Taxation of Capital Gains.
A gift tax is levied on all assets received if the donor is a Luxembourg resident. Gifts from a non-resident are subject to gift tax only in respect of real estate located in Luxembourg. Inheritance and gift tax are based on graduated rates according to the degree of family relationship of the respective individuals.
Are there additional capital gains tax CGT issues in Luxembourg? If so, please discuss? Itemized deductions or a flat-rate deduction may be made. See also the section on social security contributions. Employment income related expenses are deductible. The minimum flat-rate amount is EUR 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. Due to the Covid crisis, exceptionally for the tax year , this lump-sum annual deduction has been raised to EUR 6, for housekeeping and home assistance for disabled only. Children benefiting from a child bonus before 1 August in the form of a monthly cash payment of EUR Luxembourg has a broad network of income tax treaties double taxation treaties , some of which cover wealth taxes.
Beneficiaries of income tax treaties may in general be exempt from Luxembourg individual income tax on certain income, but such exempt income must nevertheless be reported on the individual income tax return and it is used to increase the rate of tax applied to other taxable income that is, exemption with progression. Income exempt under Luxembourg double taxation treaties may include salaries paid abroad for services rendered there to foreign companies, income from the rental of foreign real estate, and foreign business income when the taxation right goes to the other contracting state.
Foreign tax credits are often available under a double taxation treaty for taxes paid at the source on foreign dividends, interest, and royalties. What are the tax reimbursement methods generally used by employers in Luxembourg? In principle, an overpayment of tax may be refunded. Expatriates who establish their residence in Luxembourg during the course of the year will generally be required to provide the Luxembourg tax authorities with evidence of their salary earned during the part of the year they are not resident in Luxembourg.
The computation of their whole salary allows the determination of a possible refund of tax withheld in excess. The amounts of the tax prepayments are based upon the amount of individual income tax due for the previous year.
The income tax withheld monthly on employment income and pension income is computed according to tax tables set forth by the government.
Dividends and interest on profit-sharing bonds paid by a resident company exception for Luxembourg investment funds among others to its shareholders or creditors are subject to a withholding tax of 15 percent. 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.
Royalties Luxembourg-sourced paid to a non-Luxembourg resident are subject to a 10 percent withholding tax. For example: monthly, annually, both, and so on. Tax prepayments calculated by the Luxembourg tax authorities are due four times per year: 10 March, 10 June, 10 September, and 10 December. The monthly tax on salaried income is withheld by the employer and is due before the 10th of the following month.
Is there any Relief for Foreign Taxes in Luxembourg? For example, a foreign tax credit FTC system, double taxation treaties, and so on? In the absence of a treaty, a Luxembourg resident is also subject to tax on all their income from foreign sources.
The foreign individual income taxes paid on that income may, however, be credited against the Luxembourg tax liability. A global method of imputation is also permitted within limits, upon request of the taxpayer.
In order to be creditable, the foreign tax must be an individual income tax similar to the Luxembourg tax. Beneficiaries of income tax treaties may be exempted from Luxembourg income tax on certain income, but Luxembourg generally retains the right to include this income for purposes of determining the applicable tax rate on the income taxable in Luxembourg exemption with progression.
What are the general tax credits that may be claimed in Luxembourg? Please list below. This calculation assumes a married taxpayer resident in Luxembourg with two children whose 3-year assignment begins 1 January and ends 31 December The calculation does not take into account the specific tax regime for impatriates.
KPMG in Luxembourg has assumed that the social security contributions were due in Luxembourg and the child bonus was paid by the family fund. The 1. For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year. There is no specific consideration for short-term assignments in Luxembourg. In presence of an economic employer in Luxembourg, Luxembourg workdays are taxable there from Day 1.
Therefore, Luxembourg employers had to report prior end of February the information related to calendar year salaries to the Luxembourg tax authorities. Each year on 30 June, the EU Member State of residence of the employees will be automatically provided information on this income i. In addition, any individual holding a financial account e. The information to be exchanged includes financial information such as the account balance or value owned on the financial account and any payments paid or credited to such financial account during the year concerned.
Providing the short-term assignee is a non-Luxembourg resident, they would be taxable only on Luxembourg-sourced income. Are there any additional considerations that should be considered before initiating a short- term assignment in Luxembourg?
In Luxembourg the registration with the social security authorities is compulsory for all employees. An exemption from paying Luxembourg social security contributions may be granted by the Luxembourg social security Code, a bi- or a multilateral social security agreement applicable to Luxembourg.
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