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If businesses, including very small businesses do not have the obligation to entrust their bookkeeping to a registered accountant, working with an expert partner in the accounting, financial, social and tax aspects of your professional and personal environment is nevertheless highly recommended.

A registered accountant informs on the company’s situation

The registered accountant does not only do the bookkeeping and presenting the financial statements. We are able to give you clear image of the business financial situation.

The registered accountant helps you to take the right decisions

As, entrepreneur, you are constantly required to make choices. If some decisions have limited consequences, other may be strategic and complex:

Below is a small list of the strategic decisions to take when starting a business:

• The choice of legal status,
• The choice of tax options (corporate income tax or personal income tax)
• The legal structure,
• The amount of share capital
• The opening of the capital,
• …

As part of business development topics requiring sound advice might be:

• How can I optimize my tax?
• How to reduce my need for working capital?
• Is it time to invest?
• How much cost an employee?
• What would be the consequence of a particular decision on the result?
• …

The decision support tools (projected balance sheet, various simulations …) proposed by the registered accountant, but also the information from its diverse experience and situation analysis are often good advice.

The figures and studies on this subject show that the support of a registered accountant to small businesses increases their lifetime.

The registered accountant allows the entrepreneur to concentrate on his business:

When a manager outsources its accounting to a registered accountant, he has more time to focus on his business.

Our mission can be very broad and include the management of legal, accounting, tax and social security declarations.

These time consuming tasks do not allow you to work on tasks that you cannot delegate (management, marketing, purchase, trade negotiation,).

The registered accountant brings you peace of mind.

Outsourcing your accounting to us will bring you peace of mind about the quality of your books and tax declarations. Moreover, in case of error on our part, you will benefit from our insurance.

We also guide you through the administrative maze !

The official date for the submission of tax returns for individuals is 31 March. However, if you do not have to file one, the administration accepts delivery of tax returns till 31 December.

The tax administration is conducting tax reassessment on several dozen contractors which were employed through umbrella companies.

Indeed some umbrella companies in Luxembourg have organized a tax fraud scheme by which the major parts of the amounts paid to the consultants were not declared to the tax authorities. Contractors, in good faith, thus find themselves having to pay for important additional amounts of taxes and social contributions.

To recap, the portage in Luxembourg is not allowed. Moreover, given the good social protection of self-employed in Luxembourg, there is no major interest in being employed rather than self-employed. Indeed, the self-employed in the same way as the employee can benefit from sick leave and unemployment benefits.

Finally the costs relating to the accountancy is well below the management fees fees that may charge umbrella companies.

Finally in terms of professional liability, there are legal solutions which enable you to be protected.

If you want, as contractor, to switch from the status of employee to self-employed, do not hesitate to contact us. We can handle everything!

from the status of employee to self-employed, do not hesitate to contact us. We can handle everything!

• Having a physical address in Luxembourg:
  As contractor, you must have your business in Luxembourg. For this you can either rent an office or register your business at your home or client premises.
  Also if you want to register your company at your home and you are renting it, you must ensure that the lease contract does not prohibit commercial activities.

• Having a business permit:
  It is mandatory for any business and for the exercise of the vast majority of self-employed jobs. This authorization must be requested from the Ministry of the middle classes.
  Business permit is always personal. It depends on the integrity of the person and his professional qualifications.
  The professional qualifications of a contractor can be proven either by his university degrees or his professional experience.
  There is no requirement that the holder of the authorization should be resident in Luxembourg but he must live not too far to be able to easily reach the location of its activity. Thus the Ministry admits a distance of about 200 km. If there are means of rapid transportation, the distance is increased. So someone living in Paris may be granted a business permit.

• Registration for VAT:
  If the activity is subject to VAT, you must register your business at the VAT administration (administration de l’enregistrement et des domaines). You can ask for exemption if your annual turnover is below a certain amount.

• Registration for social security:
  As contractor, you will be automatically registered as you will need to withdraw your business permit at the social security administration.
  There is a monthly minimum of social contribution fees to pay but you also can ask for an exemption if your income is below a certain amount.

Despite the fact that we are not lawyers, we wanted to give some basics to our clients concerning the purchase of a property.  Indeed, some of our clients faced some problems and deceptions are quite common.

I. Definition of the sales agreement:

The sales agreement is the document by which one binds himself to deliver one thing, the other to deliver it (art. 1582 Civil Code). In this case, it is a real estate property.

II. Importance of the sales agreement:

In Luxembourg, you first sign a sales agreement which is the real sale and then a notarial deed.

The sales agreement is the real sale. The sales agreement therefore fully engages the buyer and seller to the extent that its failure usually results in the payment of a penalty clause by the offending party.
The terms and conditions of the sale will be clearly defined in the agreement as subsequently any changes will require the agreement of both the seller and the buyer. The deed is often only the formatting of the will of the parties expressed in the sales agreement.
Negotiating terms and conditions of the sale is often as important as the negotiation of the sale price.
Moreover, a clear sales agreement avoids potential conflicts by clarifying the obligations of each one.

III. Important elements of the sales agreement

1 The identity of the parties:
The identity of the parties should be checked. For this purpose a copy of the identity card is a minimum. Moreover one should also check that the property do belong to the seller wether by requesting a copy of the notary deed  or by asking the cadastral record from the administration.

2 The designation of the purchased items:
The purchased items must be clearly designated. The location, the cadastral number with the surface and the pertcentage of co-ownership of the communal areas  should be indicated. If the seller does not have all the information, it is possible to verify them at the administration of the cadastre (54, avenue Gaston Diderich, L-1420 Luxembourg).
You should check that each part is specified in the agreement. So if you buy an apartment with a garage and a garden, the descriptions of the apartment, garage and garden should be specified (the sales agreement will in this case specify three different items).
Additionaly if the property is sold with furniture (such as kitchen furniture, kitchen appliances, or bathroom furniture), it will be essential to specify it in an appendix. A standard kitchen is not considered as part of a flat, ie a kitchen is not an immovable by destination (art. 525 of the Civil Code) . If the kitchen cabinets are not indicated in the agreement, the seller will be entitled to take them back.

3 The sale price:

The price must be quoted in words and figures. NEVER pay an advance directly to the seller. It’s taking the risk of loosing money if the sale does not happen. If an advance has to be paid, you can pay it to the notary who will put in an escrow account until the deed is signed.

4 Suspension clauses:
The most common suspension clause is that a loan has to be granted to the buyer. It will set a deadline for the submission of the credit agreement. In general, the period shall be one month.
It may well include other suspensive clauses, such as the granting of a building permit or that the apartment must be free of any occupant by a certain date.
In the interest of all parties, it will be necessary to set a deadline for the fulfillment of the clauses. This is so that the parties are not committed indefinitely.

5 The penalty clause:
In order to guarantee the obligations of each party, a penalty clause should be specified in the sales agreement. In general, it provides for the payment of a penalty of 10% of the sale price if one of the parties was rescinding the sales agreement, but it can be a lower or a higher percentage.

6 The entry in possesion:
In general, the entry in possession is the date of signature of the deed. If at the signature of the sales agreement, the apartment is occupied but it is agreed that it should be free at the signature of the deed, you must write it in the sales agreement. It would be useful to provide for the payment of a daily allowance if the apartment is still occupied after a certain date or after the signature of the deed.

7 Additional clauses:
It would be useful to make an inventory of fixtures on the day of signing the sales agreement. This inventory will be added as an appendix. You should do a tour of the apartment the day before the signature of the deed to ensure that there was no damage.

8 Fees:
It is generally expected that the costs and fees of the deed shall be borne by the purchaser.

9 The date of the deed and the name of the notary:
In order to avoid to be indefinitly bound by the sale agreement, you should  indicate a deadline to sign the deed.
The sales agreement can specify the notary who will prepare the deed. It is recommended to take two notaries, one representing the buyer and the other the seller. The notaries will share the fees and there will be no extra cost.

IV. Conclusion
This post is of course not exhaustive since each sale is a special case. In addition, the sales agreement is a contract, the law gives a lot of flexibility in its writing.

Notice: These tips are provided for information and for free. They are not exhaustive. Galux declines any responsibility for the consequences of the use of this document.

If you are an employee, when you move to Luxembourg, you need to register to the “commune” (the municipality). You will automatically receive a tax card issued by the tax administration. It gives information, to your employer, on how to calculate the withholding tax on your salary.

You need to check the tax card especially the tax class.

If you are married but your spouse does not live in Luxembourg, you will have class 1a. There are some ways to change it, contact us!

You also have to check your deductions on your tax card. The classical tax deduction is the commuting cost. But there is also other deductions. Usually if you are entitled to other deductions, you will need to ask the tax administration for a change of tax card. To proceed, you have to fill the form 164R. If you need help with that, you can contact us!

After your first year in Luxembourg, you may be obliged to file a tax return. You can report to the page resident to know what the criteria are.

If you have lived less than 183 days in Luxembourg, you will be considered as non-resident.

If you are self-employed, even if your clients are abroad, you need to register your activity in Luxembourg. That means that you need to have a business permit, to be registered at the VAT and the social security. There is no withholding tax for the self-employed but given your expected turnover, the tax administration will ask you to pay some advances.

CAUTION! The deadlines for the submission of VAT returns approach:

• September 30 for claims of foreign VAT
•   October 30 for submission of the annual return

You want to start as an entrepreneur but you do not want to quit your job? That is quite possible. You do not even need to tell it your employer (under certain conditions).
In fact you can combine paid employment and self-employment. This is particularly handy for testing a prior idea before really starting.
Be registered with the tax administration and VAT also allows you to deduce your first creation costs immediately (under certain conditions). Also potential trade losses can be offset against your salary. This allows some tax savings.
Finally, if you achieve a turnover of less than one third of the minimum wage, you can ask to be exempted from the minimum social security contributions.
However you must not compete directly with your employer. You should also check that you do not have an exclusivity clause in your employment contract.
For more information contact me!

• Having a physical address in Luxembourg:
  Whether you are self-employed or you want to create a company, you must have your business in Luxembourg. For this you can either opt for a company domiciliation (only for companies) or rent an office or register your business at your home.
  However, from a tax perspective, you need to prove that business management is performed in Luxembourg. This has the effect of prohibiting “letterbox companies”. Hence the domiciliation presents some tax risks…
  Also if you want to register your company at your home and you are renting it, you must ensure that the lease contract does not prohibit commercial activities.

• Having a business permit:
  It is mandatory for any business and for the exercise of the vast majority of self-employed jobs. This authorization must be requested from the Ministry of the middle classes.
  Business permit is always personal. It depends on the integrity of the person and his professional qualifications.
  Thus, in the case of a company, it is its manager who must make the request and on whom rests the business permit.
  There is no requirement that the holder of the authorization should be resident in Luxembourg but he must live not too far to be able to easily reach the location of its activity. Thus the Ministry admits a distance of about 200 km. If there are means of rapid transportation, the distance is increased. So someone living in Paris may be granted a business permit.

• Registration for VAT:
  If the activity is subject to VAT, you must register your business at the VAT administration (administration de l’enregistrement et des domaines). You can ask for exemption if your annual turnover is below a certain amount.

• Registration for social security:
  If you are self-employed, you will be automatically registered as you will need to withdraw your business permit at the social security administration.
  If you are manager of a company and you have more than 25% of the shares, you will be considered as self-employed from the social security point of view.
  There is a monthly minimum of social contribution fees to pay but you also can ask for an exemption if your income is below a certain amount.