Lowtax Network

Back To Top

Your Lowtax Account

Country Score
+5

Country Rankings - Luxembourg


  • Sep 26, 2017   Luxembourg: balanced

    It is worth noting that not all member states are as enamored with the idea of a special tax on digital companies, or on the services they supply, as are France and Germany. Luxembourg's Finance Minister, Pierre Gramegna, for example, has spoken out against the proposals currently being bandied around Europe, cautioning the EU that digital companies "might leave or circumvent Europe," in an interview with Luxemburger Wort. Furthermore, he fears that such measures may look politically motivated as they will affect many US-based companies. "[T]hey might feel targeted so we also have political issues that need to be solved," he told the paper. Above all, this is a global problem requiring a global response, or at least discussed at the level of the OECD, Gramegna said. What was the point of BEPS otherwise? Indeed, as the OECD itself observed in its Action 1 report, the digital economy is increasingly becoming the economy itself. So, as Gramegna suggested, the EU should proceed very cautiously here. Indeed, perhaps the EU should be listening to the advice of Luxembourg more regularly. For it is a country that now knows all about finding an appropriate balance between adapting to a changing international tax environment driven by calls for increased transparency and fairness, and maintaining international competitiveness. And according to Standard & Poor's, it has largely succeeded in treading this fine line, as evidenced by its strong economic performance in recent years. However, every silver lining has a cloud. In assessing its economic outlook, S&P observed that a major source of stability could be the ongoing state aid investigations into Luxembourg's tax rulings, and if the EC's rulings are upheld on appeal, this could have a destabilizing effect on the country's tax regime. How fitting that the Commission should pose one of the most significant risks to Luxembourg's economy!
    Source: https://www.tax-news.com/news/Luxembourg_Adapting_To_International_Tax_Changes_Says_S_And_P____75301.html


  • Apr 04, 2017   Luxembourg: outspoken

    Moving on, but staying in the EU, there is probably a perception outside of continental Europe that the vast majority of EU member states toe the line come what may, committing themselves blindly to the principle of "ever closer union" and doggedly standing by EU initiatives even when they are found to be quite bad ideas. It's only the pesky, rebellious Brits that think they're so special, isn't it? It is perhaps an assertion that's unfair. Many member states have serious misgivings about such initiatives as the FTT and the proposed common corporate tax base. And even Luxembourg, which was ruled for many years by arch-Europhile Jean-Claude Juncker, the current President of the European Commission, is prepared to rebel occasionally. Luxembourg has shown by its recent actions that it fundamentally opposes the European Commission's assertions that certain tax rulings between its tax authority and multinational companies are a form of state aid. For not only is it taking on the Commission in the European Court, it also intends to support Ireland in its battle with the Commission over billions of euros in state aid supposedly given to tech giant Apple. Indeed, the EU's White Paper on the future of Europe hints that the goal of ever closer union among all member states is perhaps achievable, and that greater harmonization can only be achieved among a "coalition of the willing." It is perhaps finally an admission from the EU that one size doesn't fit all.
    Source: http://www.tax-news.com/news/Luxembourg_To_Support_Ireland_In_Apple_Case____73841.html


  • Mar 07, 2016   Luxembourg: sovereign

    I do sympathize with governments sometimes (although admittedly not very often), as there seem to be occasions when they just can't win. They're constantly being told by the likes of the OECD and the IMF to eradicate special tax regimes, widen their tax bases, reduce income taxes where possible, and shift the tax burden onto consumption. Luxembourg is one country doing just that. Last year, the Government decided to phase out its patent box regime – exactly the sort of special tax regime the OECD sees as largely responsible for BEPS – and late last month it announced reductions in income tax for companies and low- and middle-income workers. These measures come after a 2 percent increase in the standard rate of value-added tax in 2015. Yet, according to the IMF, this is still wrong: "The tax cuts are too deep, the tax base is too narrow, you'll use up all your fiscal surpluses if you do that!" it bleated in its latest Article IV report. I paraphrase, of course. Not that the IMF's recommendations are binding; it's up to Luxembourg to do what it sees fit with its surplus in my view, and any other country not receiving assistance from the Fund for that matter. And anyway, what's the point of these Article IV consultations, because they seem to be routinely ignored. Yet, every country gets the Article IV treatment at some point, usually annually or bi-annually. That's a lot of analysts' and economists' time, a lot of air miles, and a lot of money!
    Source: http://www.tax-news.com/news/IMF_Questions_Luxembourg_Tax_Reform____70622.html


  • Dec 22, 2015   Luxembourg: leverage

    Now then, forgive me if I come across as a little naïve here, but isn’t the BEPS project designed to stop the sort of thing that Luxembourg has just announced? I refer to the five-year plan to promote Luxembourg’s finance industry and transform the Duchy into the domicile of choice for “digital” financial services. As the promotional agency for the country’s finance industry observed in its announcement, Luxembourg has become a leading hub in the European Union from which global financial institutions manage their international operations. I wonder why that is? Could it have anything to do with Luxembourg’s tax regime perhaps? The agency’s news release doesn’t mention tax, and you have to wade quite deep into the accompanying report on the initiative, through all the stuff about Luxembourg’s commitment to tax transparency, before you get to it, but it’s in there alright - “Luxembourg will always strive to offer a competitive tax regime,” it says. “Being at the forefront of international discussions on automatic exchange of information does not prevent Luxembourg from providing an attractive tax environment,” the report goes on to informs us. “Remaining competitive will be a key objective of future tax reform in Luxembourg.” So, by extension, any new companies must be being drawn to Luxembourg from countries where taxes aren’t as competitive, no? Sounds suspiciously like some base erosion and profit shifting could be involved here. Not that I’m execrating Luxembourg for this. Quite the contrary. As Australian Prime Minister Malcolm Turnbull observed when talking about (surprise, surprise), tax reform shortly after ousting his predecessor, Tony Abbott, tax “is one of the key levers the Government has to promote economic activity.” All governments know this, and most of them have used the lever at one point or another. That’s not going to change, BEPS or no BEPS. Which kind of makes a mockery of the whole thing really.
    Source: http://www.tax-news.com/news/Luxembourg_To_Specialize_In_Digital_Financial_Services____69969.html


  • Sep 22, 2015   Luxembourg: temporary tax

    Conveniently, this allows me to link to the next subject: Luxembourg itself. Here, Minister of the Economy, Étienne Schneider, recently announced the abolition of the temporary additional income tax. Certainly, it's not the most earth-shattering of announcements in the world of taxation. But it's worthy of mention nonetheless because, if nothing else, it's an exception to the rule that there's no such thing as a temporary tax. It's been a pretty bad few days for the world's governments on the tax front – an encomium had to be awarded to someone.
    Source: www.tax-news.com/news/Luxembourg_To_Abolish_Additional_Income_Tax____69161.html


  • Feb 27, 2014   Luxembourg: socializing

    It's reassuring to know that the Benelux countries are going to fight against the exploitation of workers by unscrupulous Chinese gang-masters. Well, that wasn't exactly what they said: the Netherlands, Belgium and Luxembourg agreed to fight against social dumping, among other woes besetting honest working folk. This is the heartland of the EU's social partners zone, in which sound economic principles are tossed out of the window in an attempt to insulate workers against the rigours of competition. The C-word, which never should be spoken in the halls of EU governance. So what is social dumping? Like dumping in trade relations, it refers to an attempt to win by using your natural advantages in order to gain economic benefit. You come from a poor country, and you're prepared to work for less in order to feed your children back at home? That's social dumping. You place a contract with a cheap shoe manufacturer in Vietman which has the effect of putting Liege leather workers on the dole? That's social dumping (by you) as well as trade dumping (by the Vietnamese). You get the picture; and notice that both types of "dumping" actually have the effect of benefiting the consumer. The right way to deal with "dumping" is to help the threatened workers to adapt and improve, to become more competitive in other words, rather than to protect them with this farrago of mealy-mouthed and economically illiterate propaganda. But the "social partners" are deaf to such advice. Sadly, they will continue to destroy their childrens' future prospects with their well-meant but wrong-headed gibberish.
    Source: www.tax-news.com/news/Benelux_Ministers_Vow_To_Combat_Social_Dumping____63748.html


  • Feb 13, 2014   Luxembourg: giving the EU the bird

    Why does Luxembourg want to deny that's it's a "tax haven"? "Profiting 'fiscally' from other countries." Well, we know why: because in dying Europe it's not politically correct to compete against other countries any more, so Luxembourg has to pretend that it doesn't have an advantageous tax regime. But it does! And its efforts to cling on to that regime are the reason for giving it a prize. While pretending otherwise, Luxembourg is engaged in fighting a rearguard action against the extension of the Savings Tax Directive and AEI (automatic exchange of information). It refuses, quite correctly, to give in to the EU's demands for a much more encompassing Directive until all of its competitor nations (Switzerland, Singapore, Hong Kong etc) sign up to similar rules, which hopefully will never be the case. Let's be clear: people should pay their taxes; but the reality of human nature is they never will until tax rates are reasonable. In fact, Luxembourgish individual tax rates are fairly high; the problem arises because it has a number of advantageous corporate structures which have helped it to be one of the investment capitals of Europe. Thus, like the City of London, it has become the target of the jealous governments of less favored and highly indebted member states of the EU, who wish to stem their loss of investment capital and accompanying tax revenue by imposing a flat, "fair" tax regime on the entire Continent. And one of their weapons is to destroy financial competition between countries, with "harmonized" tax rates and regimes. "Profiting fiscally" means having lower taxes, in less emotive language. This is called competition, and is a Good Thing, not a Bad Thing. The bad guys are the ones who tax too much. There is an argument, of course, that in a single market area, the fiscal rules should be harmonized (as they largely are in, for instance, the USA). That's correct, of course; but if that fiscal area is in strong competition with other areas, as is the case with the EU, then having harmonized high rates of taxation is suicidal, and that's where the EU is headed, unfortunately. And the bone-headed rulers in Brussels can't even see that such is the case. They just plunge on, like lemmings, to their destiny, which on current form looks likely to be economic extinction at the hands of the BRICs and their fellows. So we congratulate the holdouts: Luxembourg, Ireland, Cyprus and a few others, who are still, and who knows for how much longer, flying the flag for low taxes.
    Source: www.tax-news.com/news/Luxembourg_Is_Not_A_Tax_Haven_Asselborn_Insists____63625.html


  • Dec 05, 2013   Luxembourg: again the FTT

    One up, one down for newly formed government coalitions this week: that in Luxembourg is sensibly standing firm in opposition to the EU's madcap financial transactions tax, while continuing to trot out the usual platitudes about cleaning up its financial center; on the other hand Mrs Merkel's shoddy Grand Coalition bargain with Germany's left-wing opposition has reaffirmed the financial transactions tax while agreeing to a national minimum wage and various other negative-sounding proposals. In this case the platitudes are to do with not increasing taxes, and are accompanied by a new tax on truck-drivers and foreign motorists, despite the fact that the Government is swimming in cash. That last bit doesn't matter too much, but what bothers me is the financial transactions tax. In a speech in Brussels last week, Algirdas Šemeta, the grandly-titled EU Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud, reiterated his support for the tax, but admitted that not much progress was being made – hurrah! He also admitted that "changes will be needed to the proposal in order to reach a compromise." Yes, and the best change would be to abort the whole sorry process.
    Source: www.tax-news.com/news/Luxembourgs_Incoming_Government_Opposes_EU_FTT____62854.html


  • Nov 21, 2013   Luxembourg: spending too much

    Now here's a riddle to test your general (well, fiscal) knowledge: what country has both the highest per capita income in the world and the highest per capita public expenditure in the world? And is so short of cash that it is considering raising taxes even higher than they already are? Only a tiny prize for guessing Luxembourg, whose only real rival at the top of the table is Qatar, and it's hardly possible to make a spending comparison. Public spending in Luxembourg per capita (and of course it's a tiny country) is two and a half times more than the Euro-Zone average, at EUR34,400, which is higher than GDP per head for all but a handful of countries. That's "only" 42 percent of GDP, whereas the Euro-Zone average is 50 percent. Spending has gone up by more than 25 percent in the last seven years. Let's duck for now the appalling fact that European governments take and spend half of their citizens' income, and just consider the situation of super-rich Luxembourg, which thinks it has a problem. Well, it does have a problem, but not the one it thinks it has – it's in a Dickensian Micawberish bind: "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery." You can multiply or divide the amounts as much as you want; the same principle applies. Luxembourg is spending too much. Of course, being Luxi-Micawber, and being the epicentre of the "social partners" heresy, the government's reaction is not to save money, but to increase taxes. If only the whole of Europe had Luxembourg's problem, it would be a happy place!
    Source: www.lowtax.net/news/Luxembourg_Mulls_Tax_Rise_To_Avert_Budget_Disaster____62684.html


  • Aug 15, 2013   Luxembourg: backs China

    Competition is the number one operating principle between countries as between species, individuals and companies, so Switzerland and Luxembourg are demonstrating their evolutionary fitness by seizing leadership of the continental European Renminbi market. Of course, the very assets that have allowed them to become two of the most successful "offshore" jurisdictions are the ones that are making it easy for them to make the running in renminbis: low tax rates, flexible corporate forms, openness to international business flows and a high level of financial expertise. It might have been expected that London would emerge as the preeminent European location for renminbi activity, especially given its historical links with Hong Kong, but this doesn't appear to be the case: renminbi deposits in London in June, 2013 appear to have been largely static at about RMB14bn, compared to Luxembourg's RMB40bn and Switzerland's RMB10bn. Trade-related renminbi transactions in London were running at RMB20bn annually in mid-2013, however. Luxembourg's success probably owes something to the fact that the three top Chinese banks have all chosen to locate their European headquarters there.
    Source: www.lowtax.net/asp/story/front/Luxembourg_Switzerland_Vie_For_RMB_Crown____61685.html


  • Apr 18, 2013   Luxembourg: mistreat China

    One country which is conspicuous by its absence from the TPP talks is of course China. Although there are ongoing negotiations between the Middle Kingdom and various other countries, and China has FTAs with a scattering of other countries, notably including ASEAN and New Zealand, on the whole it is lagging. And it considers itself as an injured party in trade affairs, complaining this week about the level of "dumping" and "counter-vailing" measures it is subject to, particular emanating from the USA. A lot of the problem revolves around the designation of China as a "non-market economy" (NME). For anyone who, like me, finds it extraordinary that China should still be regarded as an NME, a word of explanation is in order: an NME is a country in which the State subsidizes enterprises or indulges in other non-market behaviour, despite WTO rules against it. So, an NME is allowed to cheat, if you will; but the other side of the coin is that for an aggrieved counter-party, the burden of proof is lower in anti-dumping proceedings. China's accession agreement to the WTO allows it to retain NME status only until 2015; but the change is not in China's gift, and both the USA and the EU persist in regarding China as an NME, despite frequent requests from China for them to treat it as a market economy.
    Source: www.lowtax.net/asp/story/front/China_Sees_Itself_Subject_To_Increasing_Trade_Friction____60398.html


  • Nov 15, 2012   Luxembourg: is too rich

    Remember Benelux? No? It's not a kind of 1950's washing machine, actually, it was the catchy name given to the proto European Union when Belgium, the Netherlands and Luxembourg formed a kind of semi-economic union soon after the Second World War. It still exists, amazingly, but of course it has long since been subsumed into the EU to all intents and purposes. Anyway, all that to explain why Luxembourg is one of the most 'communautaire' of member states, and if any EU country 'punches above its weight' (sorry, Mr Cameron) it is surely Luxembourg, and not least at present with Jean-Claude Juncker as president of the EU (Tony Blair having been another casualty of the British absence from Brussels during his time as prime minister; he should have had a bit more foresight). None of which excuses, even if it explains, the tendency of Luxembourg to tax the living daylights out of its citizens, and it is simply incompetent that they got their sums so wrong over their 2013 budget back in October (can you remember that far back?) that they now need to scrape an extra EUR400m out of the long-suffering populace. That's EUR800 per member of the population. But you needn't cry for them: it's the richest country in the world, beating the Cayman Islands by a short head. Actually Andorra is probably richer, but it acts as a kind of information black-hole: plenty goes in, but nothing comes out.
    Source: http://www.lowtax.net/asp/story/front/Luxembourg_Eyes_New_Tax_Measures_In_2013____58180.html


  • Jul 12, 2012   Luxembourg: doing what comes naturally (in Luxembourg)

    Luxembourg, like Sweden, and unlike most other EU member states, is going to post marginal positive growth this year, and gets its gong this week not so much for having done anything particularly wonderful, but rather for not having done anything negative, and maintaining its pro-business stance through thick and thin, as witness a fairly glowing IMF report. Not that there is anything much 'thin' about Luxembourg: depending on exactly how you measure it, Luxembourg has the highest per capita income in the world, and its investment-friendly rules have attracted stunning numbers of fund managers and wealth managers (we won't call them bankers any more, will we?). I've never been to Luxembourg, or if I have I was probably napping in the back of the car and didn't notice it. But that's what Luxembourg wants: not to be noticed. Probably it's a very serious place, serious about making money, that is. It might not be that easy to have fun in Luxembourg; but then you're only half an hour away from the fleshpots of Vienna or Zurich.
    Source: http://www.lowtax.net/asp/story/front/Luxembourg_Withstanding_Economic_Crisis____56266.html



 

« Back to Country Rankings