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In 1999, Luxembourg joined the Eurozone and adopted the euro (EUR, €) as its official currency. Luxembourg is open to foreign investment and treats foreign and domestic investors equally. Adherent to Eurozone policies, Luxembourg does not employ currency controls and places very few restrictions on overseas money transfers. Sending money to Luxembourg or transferring money from Luxembourg is not restricted, whether within the EU or elsewhere.
Luxembourg does not restrict international money transfers for purposes of international trade, personal remittances, portfolio investment, and direct investment. As a European Union (EU) member state, Luxembourg is required to comply with all EU regulations and directives regarding imports, exports, custom duties, and trade treaties. Trade is also governed by the rules of the World Trade Organization (WTO). Luxembourg’s government does not implement exchange controls or restrictions on inflows and outflows of capital, in accordance with EU economic policy.
Financial reporting is required in Luxembourg for statistical purposes and for compliance with EU anti-money laundering directives. These statistics must be filed with the central bank, the Banque Central du Luxembourg (BCL), which is in charge of regulatory reports. The financial institutions handling the transaction are responsible for reporting, with the exception of large companies that do not use financial intermediaries for cross border financial transactions.
Individual travellers may carry a maximum of €10,000, or its equivalent in foreign currency, in cash into or out of the European Union, in accordance with EU customs controls.
Sending money to Luxembourg from within the Europe has become much simpler over the last two decades. The single currency and the introduction of a single payments system over a zone covering all 18 member states has made the transfer of money fast, easy, and inexpensive. Luxembourg was a founding member of the original European Economic Community in 1957 and has been a member of the European Union since its inception in 1993. Luxembourg adopted euro as its official currency in 1999. Between 1999 and 2002, both the Luxembourg franc and euro circulated and were accepted as currency.
Luxembourg is one of the six founding members of the 1957 European Economic Community, which was integrated into the European Union (EU) in 1993. Though small and landlocked, Luxembourg has made engagement with the global economy a centerpiece of its economic policy and currently has the highest level of investment freedom of any country worldwide.
Luxembourg has long been a thriving business and finance center and is a hub for international trade in the commercial, financial, and industrial sectors. It is a highly developed market economy with a skilled labor force, strong legal system, and a stable tax framework. Luxembourg has benefited historically from its strategic location in central Europe and its proximity to France, Belgium, and Germany. With well developed infrastructure and a highly skilled workforce, Luxembourg closed 2014 with a GDP of US $50.65bn. Its economy has evolved into a mixed manufacturing and services economy with a robust financial services sector that accounts for roughly 36% of GDP and a vibrant capital market. Luxembourgers have one of the world’s highest income levels and enjoy a high living standard.
As a member country of the Eurozone, Luxembourg’s monetary policy is set by the European Central Bank (ECB), which monitors its financial system, preserves foreign exchange levels, and works to maintain price stability throughout the EU.The Banque Centrale du Luxembourg (BCL) is in charge of the country’s economic missions regarding monetary policy, financial stability, production and distribution of currency, and is responsible for establishing the international investment position for Luxembourg. The BCL was founded in 1998, at the same time as the European Central Bank (ECB), and is part of the European System of Central Banks (ESCB), which includes the central banks of all 28 EU member countries.
Like many Eurozone countries, Luxembourg has a relatively high tax personal income tax burden, with a a top individual income tax rate of 43.6%. Luxembourg residents are required to declare their worldwide income, while non-residents are taxed only on the income generated in Luxembourg. Other personal taxes include a value-added tax, a surtax for the unemployment fund, and an inheritance tax. Luxembourg has double taxation treaties with 30 countries, which work to ensure that income taxed in one country is not taxed again in another.
Corporations doing business in Luxembourg are required to pay relatively low income taxes and social insurance costs. The corporate tax rate in Luxembourg is 21%, which is moderate by European standards. Companies operating in Luxembourg are required to pay corporate income tax, minimum tax, value-added tax, municipal business tax, a net worth tax, and a Chamber of Commerce contribution. There are no excess profit or branch taxes in Luxembourg.
The Banque Centrale du Luxembourg (BCL) has the sole right to issue banknotes and coins in Luxembourg and is responsible for the distribution of liquid currency across the country. Luxembourg’s monetary unit, the euro (EUR), consists of 100 cents. Euro banknotes are printed in denominations of € 5, € 10, € 20, € 50, € 100, € 200 and € 500. Coins are available in values of 1, 2, 5, 10, 20 and 50 cents, and € 1 and € 2. Each EU member country’s central bank issues its own banknotes and coins; the latter have national designs on one side and common designs on the other. All euro currency from any country is accepted within the currency zone.
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