International Company Relocation Opportunities: Luxembourg
Financial attributes of the country:
- Currency: Euro;
- Has a balanced and strong public administration;
- Has created a satisfactory and pro-economic platform in their country;
- Produced an excellent working group able to speak in different languages.
Country's Way of Life:
- Has been impartial and ensures security as its priority in the EU;
- Less number of reported crimes;
- Admirable foundation;
- Has exceptional educational institutions.
This country is known to be a brilliant choice for a parent corporation in most industries. Being one of the members of the European Union, an unbiased organization, it has built a great reputation when it comes to governance.
It also offers flexibility with regard to taxes, and its public administration officers ensure businesses and individuals are informed on how they are calculated and implemented.
Corporations and small businesses can benefit from a pool of employees who are highly skilled. They come not only from Luxembourg, but from neighbouring countries as well.
The country has been popular in terms of auditing companies and moving businesses, and in recent times, it has started to entice a growing number of IT corporations.
Company Taxes: How the taxes are implemented is dependent on the assessment and the location of the entity. Basically, the ideal rate of taxes for a company is about 29 percent.
Documentary Tax: No documentary taxes are collected when transferring shares or profits in general.
Annually, 0.5 percent is charged on net assets every 1st of January each year. However, there are some exceptions that are not part of this calculation.
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Company Tax Exclusion
There are exclusions from taxes when dividends are given. However, the company needs to meet certain criteria. For example, it needs to have 10 percent of its shares and maintain them for a year.
Gains from shareholdings are also excluded if they meet the 10 percent shares criteria or are valued at 6M euro and maintained for a year.
Tax Exclusion Methods: The country has established methods of limiting finance-related businesses for price policies. Local businesses are not part of this policy.
Businesses may demand an estimate of their taxes with a tax authority to clarify and get more detailed information on how their taxes are calculated. It is not mandatory and to be honest, the charge may be quite expensive.
Dividends coming from the country have a withholding tax of 15 percent. However, taxes are not included in interests or in liquidations of profit shares.
Value Added Taxes: In 2015, the regular rate of this type of tax was 17 percent. Other reduced rates were business services at 14 percent, utilities at 8 percent, and health services, reading materials, etc. at 3 percent.
Tax Compliance: The country has around 75 policies which are being implemented, and other rules are still being discussed for consideration.
Foreign Shareholders: Luxembourg does not collect taxes if a foreign shareholder buys a share from the country.
Intellectual Property Management
Statutory Implications: The country provides outstanding security services and recognizes IP standards and created laws to ensure brands, business ideas, logos, and concepts are protected in all industries.
Intellectual Property Policies: Some businesses related to IP have been established around December of 2007.
The flexibility of payments related to Intellectual Property is observed when obtained from an entirely different business entity.
For a qualified Intellectual Property, 80 percent of the earnings are usually exempted from taxes. Earnings are the income after all the charges and payments are made to Intellectual Property. However, the standard rate of taxes on these charges is around 5 percent.
In addition, as long as IP is qualified, 80 percent of earnings are generally exempted.
Research and Development Guidelines: The Research and Development team may be outsourced to a different business. The charges are 100 percent exempted when calculating the total Intellectual Property earnings before removing 80 percent.
Foreign Workers Concerns
Withholding Taxes: The Government taxes all the earnings of employees (which includes bonuses and other incentives). These range from 0 up to 40 percent.
Some permissible deduction is determined on the employee's wage which pertains to professional and personal aspects, like insurance, home expenses, interests on loans, and other deductibles.
Government Benefits: Employees contribute around 12 percent to 14 percent.
Foreign Policies: In 2011, tax authorities created a special tax-related calculation for foreign workers. This tax computation is only applicable to high ranking foreign workers, so they may obtain a tax shield when they are relocated. A notification can be addressed to the tax authority if the criteria or qualifications are met.
Company Set Up: The required amount to establish a capital is around 12,000 euros. It consists of at least a shareholder and a managing individual (can be a local resident or a foreign national).
Some corporations use a Public Limited Company and some partnerships bound by share. A Public Limited Company may be composed of a share owner and needs to have 3 managing directors (One director is required if there is only one share owner). Being a resident is not obligatory, so such companies can be started by foreign nationals. It requires at least 31,000 euro as the capital.
Expenses: The expenses incurred by establishing a business could reach 1,100 euro. The time frame to set it up is seven days.