Tax minimization in Luxembourg
is the legal use of the tax system in order to reduce taxes. It can take many forms and it is different from tax evasion, which is the illegal form of escaping payment. Owners of the companies in Luxembourg
who want to make sure they do not pay more than they are required can use a set of measures and effective tax planning methods
to avoid unnecessary taxation or larger taxation rates. Our lawyers in Luxembourg
can help you draw up an effective tax plan for minimizing tax liabilities.
Tax minimization strategies in Luxembourg
Investors in Luxembourg can arrange their investments and business activities for the purpose of reducing the amount of taxes
paid. A common tax minimization strategy
is to bring forward the tax deductions
into the current financial year. This can be applied to corporate gifts for clients, employees in Luxembourg
or business partners. It can apply to the purchase of necessary office supplies and even the renovation of the office space and/or the property in Luxembourg
used as the companys' headquarters.
Charitable donation can also be used to lower the amount of taxes due. Deductions apply for different types of donations. The most common type of donation and the easiest to quantify is the donation in cash. However, companies can also make donations in tangible and intangible assets. Our Luxembourg lawyers can advise you regarding the different types of donations and the deductible and non-deductible types.
Contributions to retirement plans are also a way to minimize the tax contributions. If possible, taxpayers in Luxembourg can consider maximizing their retirement plan contribution.
Taxes in Luxembourg
The corporate income rate in Luxembourg is calculated according to the company’s taxable income, as follows: a rate of 21% applies to a taxable income that exceeds 15,000 EUR and for lower incomes, the rate is 20%. The value added tax (VAT)
in Luxembourg has a standard rate of 15% and a lower rate of 12% for certain goods and services.