Luxembourg Tax regime for highly skilled expatriates

Circular of 31 December 2010 introducing a beneficial income tax regime for expatriates

The aim of this tax regime is to attract highly qualified individuals to Luxembourg and reduce the expenses incurred by companies who employ expatriates.

Who can benefit?

When the required conditions are met, both the employer and the expatriate employee can benefit from a number of tax advantages relating to the cost of the employee's move and certain repeat expenses relating to housing, school fees, family travel expenses, and tax equalisation expenses.  

According to the Circular, to take advantage of the tax benefits, the employee, who is likely to be a highly qualified individual, must contribute to the creation of new economic activity of high added value for Luxembourg and must be tax resident in the Grand Duchy.

Tax changes in recent years

From 1 January 2013, the conditions and procedures to enable inbound employees to benefit from the favourable tax regime have been relaxed. These changes are very attractive as they significantly expand the scope of the regime.   The economic aim of this action is to attract foreign, skilled workers to Luxembourg by providing significant tax savings for both the incoming worker and the employer.

This regime, initially put in place in January 2011 through Circular LIR n°95/2, was amended on 21 May 2013 to increase the appeal of the Luxembourg tax regime.

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