Tax Haven Luxembourg

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Tax haven Luxembourg has successfully evolved from being a country dependent on the manufacture of steel into an appealing business location and offshore international center. Recently, the Government deepened its focus on other sectors like logistics, plastics, health technologies, e-commerce, automotive parts, ICT and media in order to stimulate growth. These sectors in Luxembourg as a tax haven present endless opportunities and niche markets for offshore companies and investors worldwide wishing to establish a base in Europe. Many major companies which have been attracted to doing business in tax haven Luxembourg come from North America, Europe and Asia.

Country Overview

Tax haven Luxembourg, the Grand-Duchy of Luxembourg is a constitutional monarchy situated in the heart of Europe. Luxembourg has an estimated population of about 450,000 people and is one of the European Union’s founding members. Luxembourg has a member of many major EU organisations such as the European Court of Auditors, European Investment Fund, European Communities Publication Office, European Investment Bank, European Court of Justice and Euratom, and a founding member of the United Nationa, Western European Union, the EU and NATO. Politically, tax haven Luxembourg has a constitutional monarch and parliamentary democratic system of governance. Tax haven Luxembourg has a total land area of approximately 998 square miles, measuring 35 miles wide and 51 miles in length. Luxembourg has a diverse ethnic background as a result of the immigrants who came from Germany, Italy, France, Portugal and Belgium, while people from Herzegovina and Bosnia, Serbia and Montenegro have formed part of the local populace as a result of the Yugoslav wars.

Languages spoken in tax haven Luxembourg include various dialects, as well as Luxembourgish, German and France which are the official languages, with Luxembourgish being considered the mother tongue of the nation. The education system of tax haven Luxembourg is thus trilingual as classes are taught in Luxembourgish in the formative years, and then advanced to German and French. English is a compulsory language taught at school.

Tax haven Luxembourg economic is characterized by stability, high-income, low inflation and low levels of unemployment.

Luxembourg Fiscal Incentives and Advantages

Tax haven Luxembourg presents an attractive fiscal regime. Additionally, the Government has been proactive in implementing various policies to stimulate economic activity, employment and overall development. Other advantages for offshore companies that tax haven Luxembourg offers for investment and entrepreneurship are as follows:

  • Zero income and corporate tax on Luxembourg companies which are managed and controlled outside of Luxembourg and whose income is earned solely outside of tax haven Luxembourg.
  • No withholding tax on interest and royalties for local companies
  • Advanced infrastructure
  • Advanced legislative structure
  • Located in the heart of Europe
  • Home to major global players
  • Leading investment hub
  • Large population of trained professionals
  • Multilingual Population
  • Political and economic stability

Luxembourg Legislative Framework

Tax haven Luxembourg has in place a far reaching series of statutes with the objective of ensuring that financial and non financial activities within the offshore services sector are regulated and undergo the necessary supervision. As a tax haven, Luxembourg has secured a sturdy legislative framework and continues seeking to develop and maintain its good repute. Tax haven Luxembourg’s offshore laws encompass policies for the supervision of insurances and markets, maintenance, registration and businesses of commercial companies, fiduciary assets, banking secrecy, specialized investment funds, dedicated funds, tax reform, tax incentives and double taxation.

Tax haven Luxembourg’s legislative framework is developed in collaboration with the European Union and the Group of 10 so as to ensure that the jurisdiction is compliant with international standards and requirements. Some of the major services areas in Luxembourg as a tax haven include:

  • Securities markers
  • Securitisation vehicles
  • Banks and other professionals of the financial sector (PFS)
  • Investment companies in risk capital (SICAR)
  • Undertakings for collective investment (UCI)
  • Money laundering and terrorist financing
  • Pension Funds

Luxembourg Offshore Financial Services

There is a comprehensive suite of offshore financial services offered in tax haven Luxembourg. Sitting in the centre of Europe, Luxembourg is considered a gateway to doing business in Europe, home to over 550 million consumers. The fiscal climate of tax haven Luxembourg is recognised as one of the friendliest and favorable in the entire or Europe due to a modest rate of value added tax, personal income tax and corporate tax. Tax haven Luxembourg houses important global players and as a prime nation for exports, tax haven Luxembourg represents the ideal offshore jurisdiction and tax haven for setting up offshore. Offshore companies and legal entities which can be incorporated and registered in tax haven Luxembourg include the following:

  • Financial Holding Company
  • Milliardaire Holding Company
  • 1929 Holding Company
  • Foundations
  • Trusts
  • Fond Commun de Placement
  • SICAR (Société d’Investissement en Capital a Risque) (Risk Capital Investmnet Company)
  • SICAF (Société d’Investissement à Capital Fixte) (Fixed Capital Investment Company)
  • SOPARFI (Société à Participation Financière)

Commission de Surveillance du Secteur Financier (CSSF)

The Commission de Surveillance du Secteur Financier (CSSF) (Financial Centre Supervisory Committee) is organisation charged with supervising and regulating financial services in Luxembourg. The committee’s responsibilities are extensive given the highly advanced nature of the financial services sector of Luxembourg as a tax haven. As a result, the supervision of Luxembourg’s financial centre was achieved through various stages. For example, as early as October 1945, banking control was established through the creation of the Commissioner for the Control of Banks, in May 1983, the Luxembourg Monetary Institute was formed as a replacement of the Commissioner for the Control of Banks; in September 1990, the Exchange Supervisory Commission was established as the institution responsible for supervising the stock exchange market. In April 1998, the laws governing the Luxembourg Monetary Institute were amended with the view for its entry into the European System of Central Banks and in June became the Central Bank of Luxembourg. Finally, upon the passing of the Financial Sector Supervisory Committee Act in December 1998, the Financial Sector Supervisory Committee was officially established to assume the responsibilities of the Exchange Supervisory Commission as well as the supervisory responsibilities of the Central Bank.

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