Personal allowances vary from LUF 78,600 for a single person to LUF 337,200 for a married couple who both work. LUF 60,000-120,000 of investment interest is tax free. The following social security rates apply to employees and employers and are calculated on employees gross salary including benefits in kind up to maximum ceiling of LUF 2,650,000 per annum. Social security contributions are tax deductible for both employees and employers. Foreign real estate is exempt and Luxembourg real estate is evaluated at its lower tax value not market value.
Debts are deductible at their nominal value.
As such, the tax liability, and correspondingly the benefit of tax credits and allowances, pass to the partners. Non-resident companies are taxed on Luxembourg source income only. Losses may be carried forward indefinitely. Participation exemption dividends received are tax exempt. These are treated as ordinary income and taxed accordingly.