Withholding tax for Luxembourg residents
Luxembourg applies, since 2016, a 10% withholding tax on income from certain savings products for residents of Luxembourg who are not tax residents in another state. This tax is in full discharge of a person’s liability to tax on that income. This tax will not affect in anyway Luxembourg’s bank secrecy legislation.
International civil servants of the European Institutions are considered residents of Luxembourg for the purpose of this legislation, except if they declare themselves as tax residents in their home countries. If so, they will be subject to the European Union Withholding Tax Regime, and information concerning their accounts will be transmitted to their country of residence.
The following types of income are subject to the withholding tax for Luxembourg Residents :
• Interest on accounts held with a Luxembourg paying agent such as current and savings accounts, as well as overnight, term and notice deposits
• Interest on money market and bond instruments.
The following types of income are not subject to the Withholding Tax for Luxembourg Residents :
• Implicit interest and capital gains from investment funds
• Interest on a savings account held with a Luxembourg building society
• Interest income and any type of similar return on current and overnight accounts if the return is less than 0.75% per annum
• Interest income paid once a year on savings accounts not exceeding EUR 250 per person and per Luxembourg paying agent
As the withholding tax is paid in full discharge of a person’s Luxembourg tax liability, a declaration of that income to the Luxembourg tax authorities is not required.
The paying agent, in this case AMFIE, will remit the tax to the Luxembourg tax authorities without disclosing the beneficiaries of the income thereby preserving Luxembourg bank secrecy legislation.
Luxembourg has no wealth tax on individual tax payers, resident or otherwise.