Impatriate Tax Regime
Alongside a number of other EU Member States, Luxembourg has a special tax regime for impatriates. In an amended Circular of January 27, 2014, the Tax Director provides details for companies hiring experienced personnel on the international market. The regime is applied to impatriates who move to Luxembourg after 1 January 2013.
According to the Circular, the impatriate must contribute to the creation of new economic activity of high added value for Luxembourg and must be tax resident in Luxembourg.
In the Circular, the Tax Director lists the coverage of the following expenses:
- Moving expenses
- Housing costs
- School fees of children
- Tax equalisation – difference in tax charge between Luxembourg and the home country
- Exemption of certain recurring expenses and costs
- Lump-sum compensation
The Circular stipulates that this expatriate regime is granted for a maximum duration of 5 tax years following the date at which the impatriate takes up work in Luxembourg. The employer is required to provide a report of the employees benefitting from the special regime at the latest by 31 January every year.