International Comparison of Insurance Taxation … · Luxembourg General insurance – overview...

International comparison of

Luxembourg

General insurance – overview

Definition Accounting

Definition of property andcasualty insurance company

A company operating in the following insurancebranches:

Accident; sickness; land vehicles; railway rollingstock; aircraft; ships; goods in transit; fire andnatural forces; other damage to property; motorvehicle liability; aircraft liability; liabilitygeneral liability; credit; suretyship; miscellaneousfinancial loss and legal expenses.

Commercial accounts/ taxand regulatory returns

Accounting

Basis for the company’scommercial accounts

Luxembourg Generally Accepted AccountingPrinciples (GAAP) and the Luxembourg Law dated8 December 1994.

Regulatory return Separate returns have to be filed with theRegulatory Authorities (quarterly and

Tax return N/A.

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omparison of insurance taxation

Luxembourg

verview

Accounting Taxation

A company operating in the following insurance

Accident; sickness; land vehicles; railway rollingstock; aircraft; ships; goods in transit; fire andnatural forces; other damage to property; motorvehicle liability; aircraft liability; liability for ships;general liability; credit; suretyship; miscellaneousfinancial loss and legal expenses.

Not defined by tax legislation.

Accounting Taxation

Luxembourg Generally Accepted AccountingPrinciples (GAAP) and the Luxembourg Law dated8 December 1994.

Based on statutory Luxembourg GAAP accounts.

Separate returns have to be filed with theRegulatory Authorities (quarterly and annually).

N/A.

Tax returns must be filed with the Luxembourg TaxAuthorities before 31 MayIn addition, the Luxembourg Tax Authoritiesusually grants an additional extension (uponrequest) to the end of the year.

Consequently, from a practical point of view, taxreturns are usually filed by the end of thesubsequent year.

Insurance companies are to be regarded as ValueAdded Tax (VATreturn has to be filed to the Luxembourg VATauthorities within the 15 days following thebeginning of the taxable activity. Following the VATregistration, the VAT obligations are the following:

filing of an annual VAT return if the annualturnover is below EUR 112,000;

filing of an annual VATVAT returns if the turnover is between EUR112,000 and EUR 620,000;

filing of an annual VAT return and monthlyVAT returns if the turnover is above EUR620,000.

filing of recapitulative statements for supplies ofservices/goods renderewithin the EU and subject to VAT in these memberstates, through European Sale Listing (on amonthly or quarterly basis).

Not defined by tax legislation.

Based on statutory Luxembourg GAAP accounts.

Tax returns must be filed with the Luxembourg TaxAuthorities before 31 May of the subsequent year.In addition, the Luxembourg Tax Authoritiesusually grants an additional extension (uponrequest) to the end of the year.


companies are to be regarded as ValueVAT) taxable persons. An initial VAT

return has to be filed to the Luxembourg VATauthorities within the 15 days following thebeginning of the taxable activity. Following the VATregistration, the VAT obligations are the following:

filing of an annual VAT return if the annualturnover is below EUR 112,000;filing of an annual VAT return and quarterlyVAT returns if the turnover is between EUR112,000 and EUR 620,000;filing of an annual VAT return and monthlyVAT returns if the turnover is above EUR

filing of recapitulative statements for supplies ofservices/goods rendered to VAT identified personswithin the EU and subject to VAT in these member

, through European Sale Listing (on aquarterly basis).

Luxembourg: General insurance

Technical reserves/equalisation reserves

Accounting

Unearned premiums reserve(UPR)

The provision for unearned premiums shallcomprise the amount representing that part ofgross premiums written which is to be allocated tothe following financial year or to subsequentfinancial years.

The provision for unearned premiums shall becomputed separately for each insurance contract.However, statistical methods may be used and inparticular proportional and flatwhere they may be expected to give approximatelythe same results aof such methods for classes of insurance other thanreinsurance(“Commissariat aux Assurance

For insurance classes in which the risk cycle doesnot allow the use of a temporal methodmethods shall be applieddiffering pattern of risk over time.

Unpaid claims reported The said provision shall be the total estimatedultimate cost to an insurance undertaking ofsettling all claims arising from events which haveoccurred up to the end of the financial year whetherreported or not (seereported”), less amounts already paid in respect ofsuch claims.

Claims incurred but notreported (IBNR)

IBNR Provision is included in the OutstandinClaims Provision.

Unexpired risks Provision for unexpired risks shall be computedbased on claims and administrative expenses likelyto arise after the end of the financial year fromcontracts concluded before that dateestimated value exceeds the provision for unearnedpremiums and any premiums receivable underthose contracts.

It should normally be recorded under caption“Other technical provisions”,included asPremiums Reserve”. In the latter case thedescription of the item shall be "Provision forunearned premiums and unexpired rthe amount for unexpired risks is material, it shallbe disclosed separately, in the balance sheet or thenotes to the accounts.

General contingency/ solvencyreserves

N/A.

Equalisation reserves According to Article 80 of the Lawundertaking authorised in theLuxembourgcovering risks included in the "credit" class. Thereare 2 available methods to compute it. The choicemust be approved in advance by the “Commissariataux Assurances”.

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nsurance – overview (continued)

Accounting Taxation

The provision for unearned premiums shallcomprise the amount representing that part ofgross premiums written which is to be allocated tothe following financial year or to subsequentfinancial years.

The provision for unearned premiums shall becomputed separately for each insurance contract.However, statistical methods may be used and inparticular proportional and flat-rate methods,where they may be expected to give approximatelythe same results as individual calculations. The useof such methods for classes of insurance other thanreinsurance has to authorised by the regulator(“Commissariat aux Assurances”).

For insurance classes in which the risk cycle doesnot allow the use of a temporal method, calculationmethods shall be applied taking into account of thediffering pattern of risk over time.

According to Article 167 Luxembourg Income TaxLaw (LITL), technical provisions are tax deductible.Allowed as per statutory accounts.

The said provision shall be the total estimatedultimate cost to an insurance undertaking ofsettling all claims arising from events which haveoccurred up to the end of the financial year whetherreported or not (see “Claims incurred but not

), less amounts already paid in respect ofsuch claims.

According to Article 167 LITL, technical provisionsare tax deductible. Allowed as per statutoryaccounts.

IBNR Provision is included in the OutstandingClaims Provision.


rovision for unexpired risks shall be computedclaims and administrative expenses likely

to arise after the end of the financial year fromacts concluded before that date if their

estimated value exceeds the provision for unearnedpremiums and any premiums receivable under

tracts.

uld normally be recorded under caption“Other technical provisions”, but could also beincluded as liability under caption “UnearnedPremiums Reserve”. In the latter case thedescription of the item shall be "Provision for

premiums and unexpired risks". Wherethe amount for unexpired risks is material, it shallbe disclosed separately, in the balance sheet or thenotes to the accounts.


General reserves in addition to actuarial reservesare not allowed.

ording to Article 80 of the Law everyundertaking authorised in the “Grand Duchy ofLuxembourg” must set up the equalisation reservecovering risks included in the "credit" class. Thereare 2 available methods to compute it. The choicemust be approved in advance by the “Commissariataux Assurances”.

Equalisation reserves are only applicable forreinsurance captives/undertakings and insuranceundertakings covering credit risks. The relatingprovisions are tax deductible (Art. 167 LITL) buttheir reversals are fully taxable.

According to Article 167 Luxembourg Income TaxLaw (LITL), technical provisions are tax deductible.Allowed as per statutory accounts.

According to Article 167 LITL, technical provisionsare tax deductible. Allowed as per statutory



General reserves in addition to actuarial reserves

Equalisation reserves are only applicable forinsurance captives/undertakings and insurance

undertakings covering credit risks. The relatingprovisions are tax deductible (Art. 167 LITL) buttheir reversals are fully taxable.


Expenses/ refunds Accounting

Acquisition expenses Acquisition costs shall comprise the costs arisingfrom the conclusion of insurance contracts. Theyshall cover both direct costs, such as acquisitioncommissions or the cost of drawing up theinsurance document or including the insurancecontract in the portfolio and indirect costs, such asadvertising costs or the administrative expensesconnected with the processing of proposals and theissuing of policies.

Acquisition costs on lifedeferred in accordance with terms preby the “Commissariat aux Assurances

For non-life insurance classes the deferral ofacquisition costs may be permitted in accordancewith the methods laid down in the lDecember 1994.

Loss adjustment expenses onunsettled claims (claimshandling expenses)

They shall be included in the outstanding claimsprovision.

Experience-rated refunds The provision forcomprise amounts intended for pocontract beneficiaries by way of bonuses andrebates to the extent that such amounts have notbeen credited to policy

Investments Accounting

Gains and losses oninvestments

Realised gains and realised as well as unrealisedlosses are included in P&L.

Investment reserves N/A.

Investment income Realised gains and realised as well as unrealisedlosses are included in P&L.

Reinsurance Accounting

Reinsurance premiums andclaims

Premiums paid/premiums.

Mutual companies Accounting

Mutual companies (all profitsreturned to members)

No special treatment.

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Accounting Taxation

Acquisition costs shall comprise the costs arisingfrom the conclusion of insurance contracts. Theyshall cover both direct costs, such as acquisitioncommissions or the cost of drawing up the

document or including the insurancecontract in the portfolio and indirect costs, such asadvertising costs or the administrative expensesconnected with the processing of proposals and theissuing of policies.

Acquisition costs on life insurance policies may bedeferred in accordance with terms pre-authorised

Commissariat aux Assurances”.

life insurance classes the deferral ofacquisition costs may be permitted in accordance

h the methods laid down in the law dated 8December 1994.

Acquisition expenses are t

They shall be included in the outstanding claims Tax deductible as per the accounts.

The provision for bonuses and rebates shallcomprise amounts intended for policy-holders orcontract beneficiaries by way of bonuses andrebates to the extent that such amounts have not

edited to policyholders.

Profit neutralised by a corresponding taxdeductible charge.

Accounting Taxation


Realised gains and losses are included in taxableincome. If the gain is made on assets representedby technical provisions, the taxable basis generatedby such gains is generally neutralized by acorresponding technical provision.

Gains on qualifying invparticipation exemption (subject to recapturerules).

Unrealised losses are tax deductible.

According to the statutory accounts.


Taxable as per the accounts. Incomes deriving fromqualifying investments are eligible for theparticipation exemption.

Accounting Taxation

Premiums paid/ payable are deductible from grosspremiums.

Reinsurance premiums paid are, in principle, taxdeductible (irrespective of the location of thereinsurance undertaking).

Accounting Taxation

No special treatment. Taxed as per normal Luxembourg generalinsurance companies.

sition expenses are tax deductible

Tax deductible as per the accounts.

Profit neutralised by a corresponding taxharge.

Realised gains and losses are included in taxableincome. If the gain is made on assets representedby technical provisions, the taxable basis generatedby such gains is generally neutralized by acorresponding technical provision.

Gains on qualifying investments are eligible for theparticipation exemption (subject to recapture

Unrealised losses are tax deductible.


Taxable as per the accounts. Incomes deriving fromqualifying investments are eligible for theparticipation exemption.


Taxed as per normal Luxembourg generalinsurance companies.


Further corporate taxfeatures

Taxation

Loss carry-overs Unlimited losses carry forward for losses subject to

Foreign branch income Generally exempt from Luxembourg tax by application of relevant double tax treaties. Otherwise, taxcredit or tax deduction for foreign taxes could be granted.

Domestic branch income Calculated under ordinary rules. No branch tax is applicable.

Corporate tax rate Like any Luxembourg commercial company, insurance companies are liable to pay corporate income tax(CIT) at a rate of 22.05% and a municipal busines(overall tax rate: 28.80%).

Other tax features Taxation

Premium taxes In principle: 4% on the premiums applicable to all types of insurance, provided that the risk insured or thepolicyholder are located

Additional tax of 6% on premiums for fire insurance policies provided that the risk insured or thepolicyholders are located in Luxembourg. Exemption applies for life insurance premiums and reinsurancepremiums.

No premium tax on life insura

Capital taxes and taxes onsecurities

No Capital Duty (EUR 75 on bycontributions).

Net Wealth Tax is levied in Luxembourg.

The rate is 0.5% on the unitary value of the company on 1 January each year and is not deductible from thetaxable profits for calculating income tax.

The unitary value is equivalent to the net assets of the company adjusted with certain items.

The resident companies may claim a reduction of their net wealth tax liability by making an allocation to aspecial reserve.

An amount corresponding to five times the net wealth tax to be reduced must be kept in this reserve forfive years following the year in wh

The reduction may however not be higher than the corporate tax liability, before tax credits, of the taxpayer for the same year.

Captive insurance companies Like any Luxembourg commercial company, reinsurance companies are liable22.05% and a MBT at a rate of 6.75% in Luxembourg City (overall tax rate: 28.80%).

Value added tax (VAT) Insurance and reinsurance transactions, including related services performed by insurance brokers andinsurance agents are VArecipients established outside the EU.

The sale of (re)insurance contracts is in principle subject to VAT (European Court of Justice “Swiss Re”case, C-242/08, 22 October 2009). Pocontext of a transfer of going concern.

Other services rendered to or by insurance companies may be subject to VAT. Standard rate inLuxembourg is 15%. Possible exemptions may apply depending

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nsurance – other tax features

Unlimited losses carry forward for losses subject to satisfaction of continuity of legal personality.

Generally exempt from Luxembourg tax by application of relevant double tax treaties. Otherwise, taxcredit or tax deduction for foreign taxes could be granted.

Calculated under ordinary rules. No branch tax is applicable.

Like any Luxembourg commercial company, insurance companies are liable to pay corporate income tax(CIT) at a rate of 22.05% and a municipal business tax (MBT) at a rate of 6.75% in Luxembourg City(overall tax rate: 28.80%).

In principle: 4% on the premiums applicable to all types of insurance, provided that the risk insured or thepolicyholder are located in Luxembourg.

Additional tax of 6% on premiums for fire insurance policies provided that the risk insured or thepolicyholders are located in Luxembourg. Exemption applies for life insurance premiums and reinsurancepremiums.

No premium tax on life insurance premium and reinsurance premiums.

No Capital Duty (EUR 75 on by-laws amendments and ad valorem registration duty on real estatecontributions).

Net Wealth Tax is levied in Luxembourg.

The rate is 0.5% on the unitary value of the company on 1 January each year and is not deductible from thetaxable profits for calculating income tax.


ent companies may claim a reduction of their net wealth tax liability by making an allocation to aspecial reserve.

An amount corresponding to five times the net wealth tax to be reduced must be kept in this reserve forfive years following the year in which it was allocated.

The reduction may however not be higher than the corporate tax liability, before tax credits, of the taxpayer for the same year.

Like any Luxembourg commercial company, reinsurance companies are liable22.05% and a MBT at a rate of 6.75% in Luxembourg City (overall tax rate: 28.80%).

Insurance and reinsurance transactions, including related services performed by insurance brokers andinsurance agents are VAT-exempt and do not allow input VAT recovery except if they are rendered torecipients established outside the EU.

The sale of (re)insurance contracts is in principle subject to VAT (European Court of Justice “Swiss Re”242/08, 22 October 2009). Possible exemption could be where the transfer happens within the

context of a transfer of going concern.

Other services rendered to or by insurance companies may be subject to VAT. Standard rate inLuxembourg is 15%. Possible exemptions may apply depending on the services at stake.

satisfaction of continuity of legal personality.

Generally exempt from Luxembourg tax by application of relevant double tax treaties. Otherwise, tax

Like any Luxembourg commercial company, insurance companies are liable to pay corporate income taxs tax (MBT) at a rate of 6.75% in Luxembourg City

In principle: 4% on the premiums applicable to all types of insurance, provided that the risk insured or the

Additional tax of 6% on premiums for fire insurance policies provided that the risk insured or thepolicyholders are located in Luxembourg. Exemption applies for life insurance premiums and reinsurance

nce premium and reinsurance premiums.

laws amendments and ad valorem registration duty on real estate

The rate is 0.5% on the unitary value of the company on 1 January each year and is not deductible from the


ent companies may claim a reduction of their net wealth tax liability by making an allocation to a

An amount corresponding to five times the net wealth tax to be reduced must be kept in this reserve for

The reduction may however not be higher than the corporate tax liability, before tax credits, of the tax

Like any Luxembourg commercial company, reinsurance companies are liable to pay CIT at a rate of22.05% and a MBT at a rate of 6.75% in Luxembourg City (overall tax rate: 28.80%).

Insurance and reinsurance transactions, including related services performed by insurance brokers andexempt and do not allow input VAT recovery except if they are rendered to

The sale of (re)insurance contracts is in principle subject to VAT (European Court of Justice “Swiss Re”ssible exemption could be where the transfer happens within the

Other services rendered to or by insurance companies may be subject to VAT. Standard rate inon the services at stake.

Luxembourg: Life insurance

Definition Accounting

Definition of life insurancecompanies

Companies operating in the following insurancebranches:

(i) life insuranceinsurance carried on by life insuranceundertakings, the type of insurance existing inIreland and the United Kingdom known aspermanent health insurance not subject tocancellation;

(ii) marriage(iii) the insu

linked to investment funds;(iv) permanent health insurance;(v) tontines;(vi) capital redemption operations;(vii) management of group pension funds.

Commercial accounts/ taxand regulatory returns

Accounting

Basis for the company’scommercial accounts

Luxembourg GAAP and the Luxembourg Law dated8 December 1994.

Regulatory return Separate returns have to be filed with theRegulatory Authorities

Tax return N/A.

General approach tocalculation of income

Accounting

Allocation of income betweenshareholders and policyholders

No legal quote.

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nsurance – overview

Accounting Taxation

Companies operating in the following insurance

insurance, annuities, supplementaryinsurance carried on by life insuranceundertakings, the type of insurance existing inIreland and the United Kingdom known aspermanent health insurance not subject tocancellation;marriage insurance, birth insurance;

insurance referred in point (i) which arelinked to investment funds;permanent health insurance;tontines;capital redemption operations;

management of group pension funds.

Not defined by the tax legislation.

Accounting Taxation

Luxembourg GAAP and the Luxembourg Law dated8 December 1994.


Separate returns have to be filed with theRegulatory Authorities (quarterly and annually).

N/A.

Tax returns must be filed with the Luxembourg TaxAuthorities before 31 May of the subsequent year.

In addition, the Luxembourg Tax Authoritiesusually grants an additional extension (uponrequest) to the end of the year.


Insurance companies are to be regarded as VATtaxable persons. An initial VAT return has to befiled to the Luxembourg VAT aut15 days following the beginning of the taxableactivity. Following the VAT registration, the VATobligations are the following:

filing of an annual VAT return if the annualturnover is below EUR 112,000;

filing of an annual VAT returnVAT returns if the turnover is between EUR112,000 and EUR 620,000;

filing of an annual VAT return and monthlyVAT returns if the turnover is above EUR620,000.

filing of recapitulative statements for supplies ofservices/goods rendered to VAwithin the EU and subject to VAT in these memberstates (ESL) (on a monthly or quarterly basis).

Accounting Taxation

quote. Shareholders: According to Luxembourg rulesdividends paid are generally subject to 15%withholding tax, subject to the exemption providedfurther to the EU parentexemption / reduction provided by the applicabledouble tax treaties.

Not defined by the tax legislation.


Tax returns must be filed with the Luxembourg TaxAuthorities before 31 May of the subsequent year.

In addition, the Luxembourg Tax Authoritiesusually grants an additional extension (upon

end of the year.


Insurance companies are to be regarded as VATtaxable persons. An initial VAT return has to befiled to the Luxembourg VAT authorities within the15 days following the beginning of the taxableactivity. Following the VAT registration, the VATobligations are the following:

filing of an annual VAT return if the annualturnover is below EUR 112,000;filing of an annual VAT return and quarterlyVAT returns if the turnover is between EUR112,000 and EUR 620,000;filing of an annual VAT return and monthlyVAT returns if the turnover is above EUR

filing of recapitulative statements for supplies ofservices/goods rendered to VAT identified personswithin the EU and subject to VAT in these memberstates (ESL) (on a monthly or quarterly basis).

Shareholders: According to Luxembourg rulesdividends paid are generally subject to 15%withholding tax, subject to the exemption providedfurther to the EU parent-subsidiary directive or toexemption / reduction provided by the applicable

x treaties.


Calculation of investmentreturn

Accounting

Calculation of investmentincome and capital gains

Realised gains and realised as well as unrealisedlosses on investments plusare taken to P&L.

Calculation of investmentincome and capital gains

Accounting

Actuarial reserves The life insuranceactuarially estimated value of an insuranceundertaking's liabilities including bonuses alreadydeclared and after deducting the actuarial value offuture premiums.

Acquisition expenses Acquisition costs shall comprise the costs arisingfrom the conclusion of insurance contracts. Theyshall cover direct costs, such as acquisitioncommissions or the cost of drawing up theinsurance document or including the insurancecontract in the portfoadvertising costs or the administrative expensesconnected with the processing of proposals and theissuing of policies.

Acquisition costs on lifedeferred in accordance with terms preby the “Commissariat aux Assurances”.

Gains and losses oninvestments


Reserves against market losseson investments

N/A.

Dividend income Included in the P&L.

Policyholder bonuses The provision for bonuses and rebates shallcomprise amounts intended for policycontract beneficiaries by way of bonuses andrebates to the extent that such amounts have notbeen credited to policy holders.

Other special deductions None.

Reinsurance Accounting

Reinsurance premiums andclaims

Premiums paid/payable are deductible frompremiums, which are then netted in P&L accountagainst claims paid/payable (netting is allowed, notmandatory).

Mutual companies/ stockcompanies

Accounting

Mutual Companies No special rules.

79


Accounting Taxation

Realised gains and realised as well as unrealisedlosses on investments plus dividends and interestsare taken to P&L.

Please refer to general insurance.

Accounting Taxation

insurance provision shall comprise theactuarially estimated value of an insuranceundertaking's liabilities including bonuses alreadydeclared and after deducting the actuarial value offuture premiums.

Tax deductible as per the accounts

Acquisition costs shall comprise the costs arisingfrom the conclusion of insurance contracts. Theyshall cover direct costs, such as acquisitioncommissions or the cost of drawing up theinsurance document or including the insurancecontract in the portfolio, and indirect costs, such asadvertising costs or the administrative expensesconnected with the processing of proposals and theissuing of policies.

Acquisition costs on life insurance policies may bedeferred in accordance with terms pre-authorised

y the “Commissariat aux Assurances”.

Tax deductible.


Realised gains and losses are included in taxableincome. If the gain is made on assets reby technical provisions, the taxable basis generatedby such gains are generally neutralised by acorresponding technical provision.

Gains on qualifying investments are eligible for theparticipation exemption (subject to recapturerules). Unrealised losses are tax deductible.

See above our comments regarding the technicalprovisions.

Included in the P&L. Participation exemption applies to qualifyingdividend income.

The provision for bonuses and rebates shallcomprise amounts intended for policy-holders orcontract beneficiaries by way of bonuses andrebates to the extent that such amounts have notbeen credited to policy holders.

Please see our comments on Policyholders in thesection “Allocation of income between shareholdersand policyholders” above.

None.

Accounting Taxation

Premiums paid/payable are deductible from grosspremiums, which are then netted in P&L accountagainst claims paid/payable (netting is allowed, notmandatory).


Accounting Taxation

No special rules. Taxed as normal Luxembourg general insurancecompanies.

Please refer to general insurance.

Tax deductible as per the accounts

Realised gains and losses are included in taxableincome. If the gain is made on assets representedby technical provisions, the taxable basis generatedby such gains are generally neutralised by acorresponding technical provision.

Gains on qualifying investments are eligible for theparticipation exemption (subject to recapture

lised losses are tax deductible.

See above our comments regarding the technical

Participation exemption applies to qualifyingdividend income.

comments on Policyholders in thesection “Allocation of income between shareholdersand policyholders” above.


Taxed as normal Luxembourg general insurance

Contact persons LuxembourgMichel Guilluy

Tel: +352 49 4848 2502

Email: [email protected]


Further corporate taxfeatures

Taxation

Loss carry-overs Unlimited loss carry forward for losses subject to satisfaction of continuity of legal personality.

Foreign branch income Generally exempt from Luxembourg tax by application of relevant double tax treaties. Otherwise, a taxcredit could be granted or a

Domestic branch income Calculated under ordinary rules. No branch tax is applicable.

Corporate tax rate Like any Luxembourg commercial company, insurance companies are liable to pay CIT at a rateand a MBT at a rate of 6.75% in Lux

Policyholder taxation Taxation

Deductibility of premiums Premiums are tax deductible up to EUR 672 per year (multiplied by the number of persons in thehousehold) if

Interest build-up Capital and buy back value of life insurance products are normally not subject to taxation in the hand ofthe Luxembourg resident policyholder.

Proceeds during lifetime Capital and buy back value of lifethe Luxembourg resident policyholder.

Proceeds on death If the insured/inheritance tax (rates depenthe capital received.

If the beneficiary, resident in Luxembourg, receives life annuities, then a 50% exemption apply on annuitypaid out of life insurance products under certa

Other tax features Taxation

Premium taxes Tax exemption of premiums related to life insurance contracts (including unitinsurance, disability insurance or

Capital taxes and taxes onsecurities

Net Wealth Tax is levied.is not deductible from the taxable profits for calculating income tax.net assets of the company adjusted with certain items.


An amount corresponding to five timfive years following the year in whcorporate tax liability, before tax credits, of the tax payer for the same year.

Captive insurance companies Like any Luxembourg commercial company, reinsurance companies are liable to pay22.05% and awealth tax as described abov

Value added tax (VAT) Insurance and reinsurance transactions, including related services performed by insurance brokers andinsurance agents are VATrecipients established outsi

The sale of (re)insurance contracts is in principle subject to VAT (European Court of Justice “Swiss Re”case, C-242/08, 22 October 2009). Possible exemption could be where the transfer happens within thecontext of a transfer of going concern.


80

Contact persons LuxembourgGéraud de Borman

Tel: +352 49 4848 3154

[email protected] Email: [email protected]

nsurance – other tax features

Unlimited loss carry forward for losses subject to satisfaction of continuity of legal personality.

Generally exempt from Luxembourg tax by application of relevant double tax treaties. Otherwise, a taxcredit could be granted or a tax deduction for foreign taxes could be applicable.

Calculated under ordinary rules. No branch tax is applicable.

Like any Luxembourg commercial company, insurance companies are liable to pay CIT at a rateand a MBT at a rate of 6.75% in Luxembourg City (overall tax rate: 28.80%).

Premiums are tax deductible up to EUR 672 per year (multiplied by the number of persons in thehousehold) if specific conditions are met.

Capital and buy back value of life insurance products are normally not subject to taxation in the hand ofthe Luxembourg resident policyholder.

Capital and buy back value of life insurance products are normally not subject to taxation in the hand ofthe Luxembourg resident policyholder.

If the insured/ policyholder is a Luxembourg tax resident, then the beneficiary may be subject toinheritance tax (rates depends on the blood relationship link between the beneficiary and the deceased) onthe capital received.

If the beneficiary, resident in Luxembourg, receives life annuities, then a 50% exemption apply on annuitypaid out of life insurance products under certain conditions.

Tax exemption of premiums related to life insurance contracts (including unitinsurance, disability insurance or capitalisation insurance.

Net Wealth Tax is levied. The rate is 0.5% on the unitary value of the company on 1 January each year andis not deductible from the taxable profits for calculating income tax. The unitary value is equivalent to thenet assets of the company adjusted with certain items.


An amount corresponding to five times the net wealth tax to be reduced must be kept in this reserve forfive years following the year in which it was allocated. The reduction may however not be higher than thecorporate tax liability, before tax credits, of the tax payer for the same year.

Like any Luxembourg commercial company, reinsurance companies are liable to pay22.05% and a MBT at a rate of 6.75% in Luxembourg City (overall tax rate: 28.80%) as well as the netwealth tax as described above.

Insurance and reinsurance transactions, including related services performed by insurance brokers andinsurance agents are VAT-exempt and do not allow input VAT recovery except if they are rendered torecipients established outside the EU.


context of a transfer of going concern.


Unlimited loss carry forward for losses subject to satisfaction of continuity of legal personality.

Generally exempt from Luxembourg tax by application of relevant double tax treaties. Otherwise, a taxtax deduction for foreign taxes could be applicable.

Like any Luxembourg commercial company, insurance companies are liable to pay CIT at a rate of 22.05%28.80%).

Premiums are tax deductible up to EUR 672 per year (multiplied by the number of persons in the

Capital and buy back value of life insurance products are normally not subject to taxation in the hand of

insurance products are normally not subject to taxation in the hand of

policyholder is a Luxembourg tax resident, then the beneficiary may be subject tods on the blood relationship link between the beneficiary and the deceased) on

If the beneficiary, resident in Luxembourg, receives life annuities, then a 50% exemption apply on annuity

Tax exemption of premiums related to life insurance contracts (including unit-linked products), pension

The rate is 0.5% on the unitary value of the company on 1 January each year andThe unitary value is equivalent to the

The resident companies may claim a reduction of their net wealth tax liability by making an allocation to a

es the net wealth tax to be reduced must be kept in this reserve forThe reduction may however not be higher than the

corporate tax liability, before tax credits, of the tax payer for the same year.

Like any Luxembourg commercial company, reinsurance companies are liable to pay CIT at a rate ofat a rate of 6.75% in Luxembourg City (overall tax rate: 28.80%) as well as the net

Insurance and reinsurance transactions, including related services performed by insurance brokers andexempt and do not allow input VAT recovery except if they are rendered to



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