Luxembourg has one of the soundest public sector finances in the EU. The budget surplus has been in surplus for the last three years, with +0.5% of GDP predicted for 2016. The government debt to GDP ratio was 21.3% of GDP in 2015, second lowest in the EU.
The country is one of Europe’s top five financial centres.
It has a range of expertise for:
- Cross-border investment fund administration, and is second in the world behind the USA
- Wealth management
- Listing international bonds
- Cross-border life insurance and reinsurance
- Internationalisation of the Chinese currency
Value-added tax at a standard rate of 17% is the lowest in the EU. Luxembourg ranks 15th out of 189 economies worldwide and is the best in Europe for average tax liabilities and time required to file tax returns. Companies are subject to a 29.22% corporate income tax rate.
These sound economic fundamentals allow the Government to maintain a competitive level of taxation for individuals and companies, and employer social charges are low.
Thus despite people enjoying above-average salaries, total employment costs are below those of neighbouring countries. At the same time, the excellent public health care system means most Luxembourg employees not seek additional private health insurance.
Tax-related administration is among the most straightforward in the world. Luxembourg is ranked 20th globally for its overall effective tax rate.
Taxation in Luxembourg of foreign-source income is eased through numerous double taxation treaties. If no treaty applies, a foreign tax credit is available under domestic law. More information on Luxembourg's double tax treaty network can be found here.