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Luxembourg - TAXES ACCOUNTING |
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Corporate tax
Tax rate for resident companies |
Communities income tax - IRC (applicable only to capital societies):
distributed profits or not:
20% for income lower than 10,000 EUR.
2,000 EUR + 26% of the income included between 10,000 EUR and 15,000 EUR
22% of the income beyond 15,000 EUR
Municipal commercial Tax (ICC):
The operating profit of the physical persons and the societies of persons is decreased by 40,000 EUR, that of companies subjected to the IRC by 17,500 EUR. The rate of the ICC is 3% of the operating profit after allowance.
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Taxe rate on long-term capital gains |
Capital gains and losses are generally treated as ordinary trading income and expense, subject to normal corporate tax. Some capital gains are entirely tax-exempt.
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System governing groups of companies and dividends paid by subsidiaries to their parent companies |
Dividends paid to nonresidents:
Held at source of 20% or 0% full of discharge.
Exemption for the dividends of Holding companies or OPCVM.
Infringement by international agreements.
Dividends paid to residents:
Held at source of 20% giving right to an attributable tax credit on the income tax.
Dejection equal to 50% of the gross dividend (deduction included) of Luxembourgian or European Union source.
Group of company:
Admittance in the regime: administrative License for 5 years minimum.
Taxes affected: Corporate tax.
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Tax rate on branches |
Subsidiaries are considered as resident societes; branches are imposed on the Luxembourgian income.
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Income tax
Fiscal year |
The fiscal year begins on January 1-st and ends on December 31 of the same year.
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Income tax rate |
2004 personal tax rates for an single person:
There are 16 brackets (lower bracket : 9.750 EUR, higher bracket : 34.500 EUR) with tax rates ranging from 0% to 38%.
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VAT rates
Standard rates |
15%
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Reduced rates |
The reduced rates are the following: 3%; 6%; 12%.
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Other important taxes
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Name of tax |
Rate |
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Individuals Wealth tax
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0.50%
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Individuals Wealth tax
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0.50%
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Rights of recordings
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0% to 14,4%
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Successions
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15%
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Donations
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1,50% to 27,11%
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Accounting
Introduction
Establishing accounts depends on the size of companies, and referring to three criteria : total of the balance sheet (total of assets without losses of the accounting year), the net amount of the turnover (net, such as it appears on the profit and loss account) and the average number of the workforce.
General accounting principles
BALANCE SHEET
A. Subscribed capital unpaid
B. Start-up costs
C. Fixed assets
C.I. Immaterial immobilizations
C.II. Physical immobilizations
C.III. Immobilization.
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Obligations and publications
The deposit of documents which have to be published is made to the Clerk's Office of courts, for the publishing to the Special Collection of Companies and Associations. The deposit must intervene within the month of the annual accounts' approval by the shareholders or associates.
Companies have to publish a balance sheet, a profit and loss account, an affectation of results proposal, the administrators and auditor's identity, an annual report and the report of the independent auditor.
Certification and auditing
The control of medium and big companies must be made by one or several independent auditors of companies, appointed by the general assembly among the members of the Institute of Independent Auditors of Companies.
The control of small companies must be made by an accountant appointed by the general assembly for definite duration.
The conclusion of the independent auditor's report can be:
- A certificate without reserve, that is to say an approval
- A certificate with reserves, that is to say that there is approval with reserves because of discords or doubts.
- A refusal to give a certificate.
Professionals and representative organizations
The accountants' associations have difficulties to get organized because of the importance of the State in the accounting system.
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Last modified in
January 2003
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