Luxembourg is an ideal location for information technology companies: the very low value-added tax rate, the skilled workforce and the well-developed infrastructure are the obvious assets. Furthermore, there are no restrictions that apply specifically to foreign investors.
Nowadays, Luxembourg’s single most important sector is the financial services sector. The banking industry has a non-discriminatory policy toward foreign investors, which is why about 65% of this sector is made up of foreign direct investment. Another important sector is the communications industry.
Foreign companies are liable, in Luxembourg, to corporation tax if they have a fixed place of business there. Currently, Luxembourg’s basic rate of corporate income tax is 22% applying to annual profits in excess of 15,000 euros. In addition, companies are obliged to pay a 4% solidarity surcharge into the State employment fund.
The current standard VAT rate in Luxembourg is 15% and applies to a large number of products such as fuel, drinks and clothing. There is also a lower rate of 3% - applying to medical care, among other things. Finally there is a rate of 6% - applying to gas, among other things. Last but not least, there is a special 12% rate applicable to mineral-based fuels, cleaning products and tobacco.
The main Luxembourg business institution:
