Luxembourg

Also known as Grand-Duche de Luxembourg and Groussherzogtum Letzebuerg, the official name of Luxembourg is the Grand Duchy of Luxembourg. It has a total area of 998.6 square miles and an estimated population of 502,202 people. The official languages are Luxembourgish, French and German. Even though Luxembourg is a secular state Christianity, Judaism and Islam are practiced. The estimated per capita nominal GDP of Luxembourg is $108,831.

History

Luxembourg's history is related in a significant way to its surrounding countries and dynasties. Its history dates back to the Roman Ages. The House of Luxembourg, a powerful kingdom, emerged after 963 and was in prominence for almost 500 years. It became a part of Southern Netherlands after the Eighty Years' War. Germany took possession of Luxembourg from 1914 to 1918 and again from 1940-44. After the Second World War, Luxembourg has risen to become one of the more affluent nations in Europe.

Economy

Luxembourg has a stable and high income economy and their rate of economic growth can be described as moderate. The industrial sector was, till the 1960s, dominated by steel but has now widened its reach to include chemicals, rubbers and various other products. In the past decades the financial sector has grown substantially and this has compensated for the decline of the steel industry.

It is also the second biggest investment fund center of the world besides being the most crucial private banking center in Eurozone. Luxembourg also happens to be the most prominent center for reinsurance companies. The national government has been able to attract a number of internet start-ups such as Skype and eBay.

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Offshore Company in Luxembourg

General Overview.  Luxembourg is one of the largest offshore financial centers of the world. Financial industry employs a significant part of the population and brings more than one third of the country’s GDP. This country has developed favourable business management regulations and is often chosen by entrepreneurs and investors who wish to conduct an offshore business activity in the EU. The establishment and successful development of Luxembourg Stock Exchange was crucial for ensuring high level financial services.

Banking Sector. International banks provide modern banking products and services to international customers from Luxembourg. Private banking is particularly developed in the jurisdiction. Secrecy laws have statutory force.

Holding Companies. Convenient taxation regime in combination with its geographical location, EU membership and extensive double taxation treaties network make Luxembourg one of the primary choices for an offshore holding company formation there. It may take different legal forms, which must be analyzed and determined on the individual basis.

Investment Funds.  In 2004 the local authorities decided to allow offshore hedge funds to be listed on Luxembourg Stock Exchange, which significantly favored the development of the hedge fund industry. Luxembourg became a good alternative for listing investment funds to Ireland, which was generally chosen for listing offshore funds till 2004. Different types of investment funds may be registered and managed from Luxembourg.

Shipping Management. Regardless the fact that Luxembourg is a landlocked country, the jurisdiction has introduced a number of incentives tax-wise for companies and individuals involved in shipping management business.

Taxation in Luxembourg 

Citizens of Luxembourg pay vast taxes on personal income (at 56%) and very low social security contributions. Corporations pay the following taxes:

• Income from companies can be up to 39%.

• Dividends are 15%

• The transfer of license rights between 10-12%.

• Tax on the accrued interest.

However, it is extremely beneficial to organize holding companies or investment funds as they are exempt from paying income taxes on property and dividends.

In addition, the data is supplemented by benefits and other concessions in order to stimulate investment activity for the companies SICAV, SOPARFI and reinsurance companies.

With regard to treaties on avoidance of double taxation, Luxembourg has treaties with 22 countries, including the U.S. and the UK.