Luxembourg is the richest country in the world in terms of GDP (Gross Domestic Product) and one of the smallest in size. Gives a unique environment of low taxes for international investors. It is also a founding member of the European Union, a fact that sits oddly with its tax haven status. The country is widely used by companies to structure cross- border transactions, but because of its place in the political environment in Europe is constantly adapting its tax legislation to prevent harmful conflict with the tax authorities of other EU countries. Because of its progressive and adaptable approach, Luxembourg, and remains, a beneficiary country for international business structuring. As a result, the Luxembourg tax laws are often under the scrutiny of EU states and are prone to change.
Luxembourg is recognized as a stable and well established jurisdiction for international tax planning and financial structures.
There are two main types of business entity of low taxes - Holding Company 1929 and SOPARFI. In fact, it would be more accurate to define a SOPARFI as a tax-efficient company in lieu of taxes low. None of these companies is a legal entity in its own right.Holdings companies are currently considered as the indispensable tool for all business development, whatever the importance of the project.
These companies are recommended for any acquisition of portfolio of brands, software, electronic commerce, etc. The location of a holding company is of paramount importance as objectives to be achieved. Certain foreseeable economic situations often make the creation of a holding company inescapable any development project.
Luxembourg is a major financial services center. There are over 200 banks in a country whose population is less than half a million. No surprise, then, that Luxembourg offers world class banking services.
- three (3) Directors.
- Two (2) Shareholders.
- The minimum capital is 40,684.92 USD.
- The audited accounts is required, the registered office must be in Luxembourg.
- Can not operate or lend money except to its subsidiaries.
- Activities restricted to owning shares in other companies.
- Exempt from income tax and wealth tax.
- Taxes are only 1% tax on the capital and 0.2% tax on shares.
A holding Company in 1929 with funds of more than 24.8 million euros, one billion francs in old currency of Luxembourg has a multimillion dollar status. This entitles you to a more favorable tax regime. The minimum tax for a multibillion-dollar company is 65,636.38 USD, far less than the equivalent of the Holding Company would pay 1929. SOPARFI:
- Subject to normal tax on corporations.
- The right to benefit from double taxation (as opposed to the
- Holding Company 1929).
- Favourable tax treatment on profits and dividends.
The law that the companies in Luxembourg are under is based mainly on Belgian company law of 1913, and large part of their subsequent amendments are based on directives EU. The Holding of 1929 is short of a holding company formed under the Luxembourg law of July 31, 1929. This law created a privileged tax regime for companies whose sole purpose is the passive holding of shares or other investments.
1929 Holding company in Luxembourg are exempt from all taxation. Are subject to capital tax and a tax of 0.2% for the subscription of shares that is levied on the higher of 10 times the dividends the previous year or the market value of its assets. In practice, in the case of the 1929 Holding companies not listed, is used as a base for calculating tax on capital subscription plus the premium.
The Soparfi is a fully taxable entity that benefits from the participation exemption Luxembourg, the Luxembourg closed treaties on double taxation and the EU directive on parent companies and subsidiaries. This means that most dividends and capital gains are exempt from tax in Luxembourg and the rates of withholding tax on foreign dividends paid to Soparfi also tend to be low. The Soparfi is often used for financing activities and holdings.
Double Tax Treaties
Luxembourg has ended many international treaties avoid double taxation (currently there are 48 treated force). As a result taxes withholding tax on dividends, interest and copyrights are often reduced to zero depending on the taxpayer's residence.
Countries that have double tax treaties with Luxembourg: South Africa, Albania, Germany, Argentina, Armenia, Austria, Azerbaidjan, Bahrein, Barbuda, Belgium, Brazil, Bulgaria, Canada, China, Cyprus, Korea, Denmark, United Arab Emirates, Spain, Estonia, USA, Finland, France, Georgia, Greece, Hong Kong, Hungary, Mauritius, India, Indonesia, Ireland, Iceland, Israel, Italy, Japan, Kazakhstan, Kyrgyzstan, Kuwait, Latvia, Liban, Liechtenstein, Lithuania, Macedonia, Malaysia, Malta, Morocco, Mexico, Moldova, Monaco, Mongolia, Norway, Uzbekistan, Pakistan, Netherlands, Poland, Portugal, Qatar, Czech Republic, Romania, United Kingdom, Russia, San Marino, Serbia and Montenegro, Singapore, Slovak Republic, Slovenia, Sweden, Switzerland, Syria, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, Uruguay and Vietnam.
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