Taxation of savings for Luxembourg residents
Since 2006, a final flat rate withholding tax is levied on the interest income of Luxembourg resident individuals upon election by the taxpayer. The applicable withholding tax rate is equal to 20% since 1 January 2017. The income liable to fall under this withholding tax was initially defined by reference to the scope of application of the EU Savings Directive. Applicable legislative provisions were adjusted in 2016 further to the repeal of the EU Savings Directive.
Further details regarding the scope of the domestic withholding tax on interest income (colloquially referred to as “RELIBI”) can be found in Administrative Circular Relibi n°1 dated 27 February 2017.
Taxation of savings for non-residents
Since 1st January 2015 the EU withholding tax on interest payments is no longer applied on EU non-residents having a bank account in Luxembourg. Instead, relevant financial information, including interest paid on such accounts, are reported to the Luxembourg tax authorities for the purpose of the automatic exchange of information.
