Luxembourg impatriate tax regime

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Luxembourg impatriate tax regime

Aim of the regime

The aim of this favourable tax regime is to attract foreign, skilled workers to Luxembourg by providing significant tax savings for both impatriates and employers. This regime initially put in place in January 2011 through Circular LIR n°95/2, was amended on 21 May 2013 and on 27 January 2014 in a favourable way.

A summary of the conditions

The regime applies to impatriates coming to Luxembourg, i.e.

  • Employees who are part of an international group and who are assigned to a Luxembourg office of the group
  • Employees directly recruited abroad

Employer conditions - the Luxembourg entity must employ or commit to employ at least 20 full-time employees in the mid-term. If the entity has been in existence for at least 10 years, the maximum percentage of employees benefiting from the regime cannot exceed 30% of the total
number of employees.

The regime applies without prior agreement of the Luxembourg tax authorities. In terms of procedure, the employer is required to provide a report of the employees benefiting from the special regime at the latest by 31 January every year. In case of non-resident employers are not required to withhold wage withholding tax on salaries and do not opt to do it on a voluntary basis, the individual is required to file a Luxembourg income tax return.

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How Deloitte can help

Assessment of eligibility
Initial assessment to establish whether the regime can apply for a particular impatriate or not

Analysis and recommendations
Design/Amendment of the impatriate package and contractual arrangements to ensure that the conditions set by the Circular are met, and to
maximise savings available through the regime

Salary
Perform hypothetical calculations to determine the impact on the savings on the impatriate package

Assistance with payroll
Assistance with the payroll to ensure a correct reporting of the impatriate package and applicable tax reliefs

Annual reporting
Preparation of annual report to the tax authorities, including verification / confirmation that the conditions continue to be met

Contact

Pierre-Jean Estagerie

Pierre-Jean Estagerie

Partner | Deloitte Private Leader

Pierre-Jean is partner in our tax department and has 15 years of experience in advising employers/executives on personal tax matters as well as private clients in a national and international context.... More