The Leading Edge - Summer 2009 - 12

luxembourg is only a city. The Grand-Duchy of Luxembourg is an independent sovereign state organized as a constitutional monarchy and situated in Europe between Belgium, France and Germany. The country is 51.7 by 32 miles with a population of about 480,000. Besides the capital Luxembourg City, another 116 municipalities are spread throughout the 999 square miles. Officially founded by a duke in 963, the Grand-Duchy of Luxembourg gained its independence in 1839 after a number of occupations during the Middle Ages. luxembourg is French-speaking. The Grand-Duchy of Luxembourg is a multicultural hotspot offering a truly cosmopolitan environment. Almost half of its residents are foreigners while no less than 69 percent of the residents of LuxembourgCity originate from 143 countries. Beyond the resident population of the country, almost 150,000 commuters from France, Germany and Belgium cross the border to Luxembourg daily. Besides the three official languages (French, German and Luxembourg language), a variety of other languages are spoken in the country. While English is the common business language, other widespread languages are Portuguese, Italian and Spanish. In other words, almost all Luxembourg nationals speak at least four languages (Luxembourg language, German, French and English). Services from a Luxembourg company can thus generally be offered in the main European languages. luxembourg is an offshore center. Although Luxembourg has bank secrecy, the country should not be seen as an offshore center. Luxembourg companies and private individuals are fully taxed, and Luxembourg applies all the European rules and regulations with regard to taxation and anti- 1 2 money laundering. The fact that Luxembourg companies are recognized on an international level can be shown by the more than 50 double tax treaties signed with major countries. In principle, no withholding taxes on dividends or interest are applied in foreign countries when paid out to a Luxembourg company, which illustrates that Luxembourg companies are considered as fully taxable and not as offshore companies. Further, an exchange of information with foreign countries may be applied in the case of a criminal incrimination. Luxembourg is an onshore, professional and dedicated place for serious financial services, which is illustrated by its fourth position in the world competitive yearbook. You do not pay taxes in luxembourg. The corporate income tax in Luxembourg is 29.63 percent (for Luxembourg City) and the income tax for private individuals can reach a maximum of 38 percent. The attractive tax minimization strategies that might be known are mainly tax exemptions on holding and investment activities. Hence, under certain circumstances dividends received and capital gains received from the sale of shares can be tax exempt. a “nominee” and a “real” director of a Luxembourg company. A company needs to comply with the law, and the board of directors is ultimately responsible for the company’s deeds, regardless of the fact that the directors might be “nominees.” Therefore, a director shall thoroughly check and follow the company’s activities. This means that a directorship is a time-consuming task coupled with a certain responsibility. It is therefore not that easy to find nominee directors who are executing the task proactively and with the necessary integrity. luxembourg has no real industry. More than financial services, Luxembourg presents itself as a highly diversified economy with state-of-the-art logistics, pioneering manufacturing and R&D, a strong automotive cluster and cutting-edge ICT infrastructures. Luxembourg’s wealth originated with the discovery of iron ore in the south of the country and the resulting development of a powerful iron and steel industry worldwide. For almost a century, the iron and steel industry played a driving role in the country’s economy and placed Luxembourg at the forefront of industrialized countries with a high standard of living. Both the Luxembourg authorities and private operators were aware of the danger of relying solely on the iron and steel industry, and they endeavored to make the country’s economy more balanced. The measures taken were based on the construction of European economic cooperation, an aggressive policy aimed at economic diversification by offering incentives for investment and the development of an international financial sector. These measures were highly successful. Industrial businesses of all sizes in diverse sectors, using modern technologies, joined the traditional heavy industries, mainly as a result of an 4 5 6 nominee directors are easy to find in luxembourg. There is no distinction between 3 12 DoInG BuSInESS In LuxEMBouRG MEAnS WoRkInG WITH EFFICIEnT AnD InnovATIvE CoMPAnIES. VOLUME 9 n ISSUE 4 n SUMMEr 2009

The Leading Edge - Summer 2009

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