Luxembourg commands a strong position in Europe considering its small size. It is fairly centrally located, which makes it an ideal base for any contractor working abroad and looking to work across a number of different regions in time. It is also a location for European, if not International headquarters for many large firms, ensuring a great business atmosphere and accessible pool of talent and resources. Choosing Luxembourg as your work country has many benefits for a contractor, but here we’re answering some of those essential questions you need to know before making your decision.
What are the Benefits of Working in the Luxembourg?
The top three benefits of working in Luxembourg are:
- The quality of social security support and coverage
- Great quality of life
- Security due to the low crime rate
Maximum Salary Retention is Important to me; how much will I take home?
The maximum salary retention available to you depends on the way you work in Luxembourg. If you choose a local employment solution you will retain around 56-62%. If you are self-employed you will retain 61-68% and if are payrolled through your limited company you can expect 65-75%.
What are the Levels of Taxation in Luxembourg?
Taxation in Luxembourg is on a progressive scale. Married couples pay less tax in general. For example, an individual having a gross salary of €4,500 a month will pay a tax of €334.4 a month when married, as opposed to a tax of €915.5 a month when single. For household earnings of €8,300 a month, one will pay a tax of €1,574.6 a month when married, as opposed to a tax of €2,501.3 a month when single (according to the 2018 tax table).
What are the Social Security Requirements?
Luxembourg is known for the quality of its social security. All contractors are required to pay towards health coverage, unemployment benefits and pension. The levels of each of these available in Luxembourg are notably high too.
How do I register locally in Luxembourg? What Local Registration do I need?
Within three days of your arrival in Luxembourg you must register at the nearest commune (town hall).
Do I need a Permanent Local Living Address in Luxembourg?
As an employee in Luxembourg you can choose to live in the country itself or you can also live in the border countries, France, Germany or Belgium. If you are self-employed, you may still live in the aforementioned countries, however you will need to register a physical office in Luxembourg. Hence, if you choose self-employment, you might want to live in Luxembourg from the beginning and use a separate room of your residence as an office.
Is the Process for Claiming Expenses Different in Luxembourg? What’s covered/not covered?
As an employee in Luxembourg you will find commuting expenses are tax-deductible, this is in addition to life insurance contributions (if you use a Luxembourgish provider) and also interest paid on bank loans in Luxembourg.
If you are self-employed then your expenses related to the conduction of your business in Luxembourg, which are proven by receipts, may be tax-deductible. As a general rule, 30% of your gross income can be claimed as expenses, dependent on approval from the tax authorities.
Can I Just Use My PSC (limited company)?
Working in Luxembourg through your own personal services company via Access Tax and Accounting (ATA) will boost your net retention whilst adhering to the compliance standards.
What steps do I need to take to be Compliant?
Compliancy depends on your registration with the commune on arrival and then all you need to do is provide Access Financial with your permanent address, as well as whether you plan to work on an employed or self-employed basis. We take care of the rest for you.
Can I pay my Taxes back at Home because my Stay is Less than 183 Days?
If you stay less than 183 days in any given year, then you are going to pay taxes in Luxembourg, just on the income that you earn in Luxembourg. If you stay longer, then you will be liable to pay taxes on your worldwide income, in Luxembourg.
What is the best solution for my circumstances?
The solution which is best for your needs will depend on your individual circumstances. Access Financial provide local employment, self-employed and PSC options for contractors in Luxembourg. It will depend on the nature of your business and the working model you prefer.
I’m a Non-EU National – How does employment in Luxembourg work for me?
To retain a residence and work permit in Luxembourg you will need to be qualified to at least first (bachelor’s) degree level. You must also have a clean criminal record and earn a gross salary of €4500 a month or more. We do sponsor residence and work permits for non-EU nationals in Luxembourg.
Access Financial has a great reputation for providing contractors with the sound financial knowledge and support required to make working abroad stress free. Once you get in contact with us we can talk through your needs and begin setting up the right legal framework for you to contract in Luxembourg.
If you want to find out more, please contact one of our Access Financial sales consultants:
London +44 20 7017 3110
Cyprus +357 25 820 640 / +357 25 820 641
Luxembourg + 352 62 1677 847
Or email us firstname.lastname@example.org