Last year, a Flemish TV show did a great spoof on Luxembourg, titled What if everybody forgot about Luxembourg? (see below with subtitles). It was uploaded shortly after I joined our Luxembourg practice and I found it hilarious. During the past few months, however, I have learned that Luxembourg has a lot to offer, and not only from a tax perspective.
Many know Luxembourg for cheap fuel, tobacco and alcohol. Many Europeans make a stop in Luxembourg for these reasons. But the fact that almost 48% of Luxembourg's residents are foreign[1] is confirmation of Luxembourg's appeal in other areas as well. On top of that, there are many commuters from Belgium, France and Germany who come to work in Luxembourg every day. Luxembourg has a qualified and multilingual workforce, a pleasant quality of life, stable political, social and economic environments, and very competitive tax and social security regimes.
Luxembourg was one of the founding countries of the European Union, and lies in the heart of Europe. The tax updates in what Luxembourg called the Tax Reform 2017 are less extensive and less burdensome than what many countries update every year. Where there have been talks about Brexit, Frexit and Nexit, there has been no doubt that Luxembourg wants to remain in the EU and the Eurozone.
Tax-wise, Luxembourg is also great. The average tax burden in Luxembourg has just fallen again following the Tax Reform 2017, and even with the introduction of two new tax brackets for higher incomes and a phase out of the tax credit for incomes over €40,000, the average net income will still increase in 2017. Our newsletter in December explained the main changes of the reform, and this attachment shows a tax comparison for 15 different scenarios—in 14 of which the net income increased due to the Tax Reform 2017.
Recently, I compared employer costs and net salaries in 17 European countries using our KPMG LINK technology.[2] For a salary of €100,000, the highest net salary is €32,960 higher than the lowest net salary. For a salary of €200,000 the difference is even bigger, at €58,904. In these comparisons, Luxembourg comes in second place for both scenarios. Also, employer's costs are relatively low, especially compared to Belgium, France and Sweden. The graphs below summarise these findings.
When Theresa May triggered article 50 on 29 March 2017, Brexit became fact. Since then, several companies have announced they are looking to move (part of) their workforce to another EU country. Luxembourg is high on the list for many of these companies, (and especially for insurers), for a variety of reasons. From experience I know that moving to another country can be a strain on your personal life, but on the other hand it also offers many great opportunities.
In Luxembourg you will enjoy a pleasant way of life. Luxembourg has a comprehensive social security system, so you have nothing to worry about there. There is a lot of history and beauty in Luxembourg and within a matter of hours you are in one of the other beautiful places Europe has to offer. With a very favorable tax system, you will be enjoying more of your gross salary in Luxembourg than in almost any other European country. Luxembourg is a small country, but with a lot of greatness.
Footnotes
[1] Source: Statec
[2] Based on a married resident employee, two dependent children, fully subject to tax and social security in the respective country.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
