Luxembourg - Tax Guide for Freelance Contractors

Tax residents in Luxembourg:         are liable to pay Luxembourg tax on their worldwide income,
Non tax residents in Luxembourg:  are liable to pay tax on Luxembourg-source income.

Individuals will be regarded as tax residents:

• if their customary abode is in Luxembourg,
• if their centre of economic interests is in Luxembourg.

Married persons’ income is aggregated for tax purposes. Unmarried taxpayers living together who have registered a partnership agreement (“civil partners”) are not taxed jointly, but can be upon request.

Taxable income includes:

• employment income,
• most benefits in kind,
• income from property,
• dividends.

Certain deductions are permissible for 2011 including:

• basic personal allowance of EUR 480,
• private insurance up to EUR 672,
• old-age pension,
• compulsory social security contributions, paid in Luxembourg or abroad,
• alimony and annuities,
• childcare and housekeeping costs,
• charitable contributions,
• interests on personal and mortgage loans,
• allowance for professional travel between home and work capped at EUR 2’970

Tax credits available for 2011 include:

• EUR 300.00 for employees and pensioners,
• EUR 750.00 for single-parents,
• EUR 300.00 for individuals who exercise an independent profession.

Income tax rates for 2011:

There are 17 individual income tax brackets. They range from 0% on income up to EUR 11’265 to 39% on income over EUR 41’793.

Tax rates are increased by 4% (avg.) for the unemployment fund contribution and 0.8% for crisis tax.

Filing date:

Tax returns are due by 31st of March of the following year.