Personal taxation · Luxembourg
Dividend tax for individuals in Luxembourg: withholding
A dividend is dealt with on the basis of its gross amount and the payer's status, applying any exemption and withholding tax rules. The regime for individuals is not the same as the participation exemption available to a holding company.
Financial Services Luxembourg · Licensed accountant · Head of the firm: Mickaël LOC. Editorial update: .
The partial exemption is conditional
Luxembourg law provides an exemption of half the amount for certain income from shareholdings that meets the conditions. Not all dividends and fund distributions should automatically be treated as falling under it.
The tax status and location of the payer, as well as the applicable legal framework, must be checked. The shareholding thresholds of a SOPARFI cannot simply be transposed to an individual.
Withholding tax and taxable income
Tax withheld does not replace the analysis of the return. A net payment must be reconstructed using its gross amount and the withholding tax relating to the same transaction.
Foreign withholding tax is not always fully creditable. The tax treaty, limits and supporting documents may also determine whether a separate claim should be considered in the source country.
Fictitious example
A statement shows EUR 850 received after withholding on a gross dividend of EUR 1,000. Declaring only EUR 850 without identifying the applicable exemption and the treatment of the withholding tax does not allow a correct calculation.
Nor should the dividend be confused with a capital reduction or the proceeds of a sale of securities: the classification can change the treatment.
Useful documents
- Payment notice and identity of the payer.
- Gross amount, currency, date and withholding tax.
- Status or information needed to examine the exemption.
- Annual statement and other investment income to reconcile.
The firm’s other tax engagements
Depending on your situation, the firm also handles tax, VAT and payroll, the regularisation of late tax filings and assistance during a tax audit. Fees are listed in the firm’s fee grid.
Official sources and scope
The rules apply to the year and profile concerned. Examples flagged as fictitious explain a method; they are not an individual validation. The documents and options of your file are covered by a separate engagement.