Once your startup has been set up in Luxembourg, what are the main accounting/tax/VAT compliance aspects you should take care of? Here are the top 10 points shared by Adrien Rollé, CEO of FinCorp to keep in mind.
1. Do not forget to send your invoices to your service provider! A Luxembourg company should keep accounting records on a day-to-day basis and should publish its annual accounts on the Luxembourg Trade Register before June 30 of the following year (i.e. June 30, 2019 for the 2018 annual accounts).
2. As of fiscal year 2018, the aggregate corporate tax rate (including corporate income tax (CIT), municipal business tax (MBT) for the city of Luxembourg and solidarity surcharge) amounts to 26.01%. As of fiscal year 2019, the aggregate corporate tax rate amounts to 24.94%.
3. Limited liability companies are subject to a net wealth tax (NWT) rate of 0.5% on their unitary value (i.e. their net asset value), not exceeding €500 million. A NWT rate of 0.05% applies on the portion of the unitary value exceeding €500 million.
4. In every case, each entity is subject to a minimum NWT between €535 and €32,100 with a flat rate of €4,815 for financial entities.
5. The corporate tax returns of year N should be filed before May 31 of the following year (administrative extension deadline). Corporate tax returns have to be filed electronically as of the fiscal year 2017.
6. Tax advances should be paid quarterly.
7. Luxembourg has the lowest normal rate of Value Added Tax (VAT) in Europe, i.e. 17%. You may benefit from other reduced VAT rates under specific conditions.
8. The frequency of VAT returns depends on your annual turnover. Monthly and quarterly VAT returns must be electronically filed via the eCDF platform. Annual VAT returns can be filed electronically or in paper format.
9. The employer has to affiliate newly appointed employees with the social security administration within 8 days of the new employee’s entry into service. The declaration of start of employment for a private-sector employee should be sent to the Joint Social Security Center (Centre Commun de la Sécurité Sociale – CCSS) on paper or electronically.
10. Details of the contribution burden for the employer:
• Health insurance: benefits in cash: 0.25% / benefits in kind: 2.80%
• Pension insurance: 8%
• Long-term care insurance: –
• Accident insurance: 0.90%
• Occupational health: 0.11%
• Mutual insurance scheme: depends on the contribution class to which the business belongs
The employer has to settle the balance of the monthly CCSS’s invoice within 10 days of the date of issuance of the contribution statement. Late-payment interest may apply.