Professionals moving to Luxembourg rarely struggle to manage their money. The Grand Duchy is one of the world’s leading financial centres, and banking and finance make up roughly a quarter to a third of its economy. You can choose from more than 100 banks, both homegrown and international, so it’s simple to open an account and handle everyday money matters. Tax is the part that takes more thought, so it pays to get to grips with your obligations from the outset.
Money in Luxembourg
Like the rest of the Eurozone, Luxembourg uses the euro, which is divided into 100 cents.
- Notes: EUR 5, EUR 10, EUR 20, EUR 50, EUR 100, EUR 200, and EUR 500
- Coins: 1 cent, 2 cents, 5 cents, 10 cents, 20 cents, and 50 cents, along with EUR 1 and EUR 2
Banking in Luxembourg
Expats have plenty of options for banking in Luxembourg. For everyday accounts, the main retail names are Spuerkeess (also known as BCEE, the state-owned bank), Banque Internationale à Luxembourg (BIL), BGL BNP Paribas, Banque Raiffeisen, and POST Finance. There are big international names like Deutsche Bank and HSBC that operate here too, but they mostly serve corporate and private-banking clients.
Branches are generally open from 8.30am to 4.30pm, Monday to Friday, and few are open on Saturday mornings. Many have shorter counter hours or work by appointment, since most everyday banking has shifted online.
Opening a bank account
You’re not legally required to open a bank account in Luxembourg, and you can keep running your money through an overseas one. Even so, you’ll find everyday life much easier with a local account, from picking up your salary to paying rent and bills by direct debit.
There are no restrictions on foreigners opening an account. Most banks ask you to come into a branch in person, although some let you start online, so you can apply from abroad before you’ve even arrived.
If you open the account online, you may need to post or upload scanned copies of the required documents. Most banks want photo ID, such as a passport or national identity card, plus proof of address, whether that’s local or from back home. Some also ask for proof of employment or income and a Luxembourg tax number, and it’s increasingly common for banks to request a residence certificate from your local commune.
ATMs and credit cards
With so many banks around, you’ll rarely have to hunt for an ATM in Luxembourg. You’ll spot them outside bank branches, in supermarkets, in shopping centres, and at the main train stations.
International bank cards, such as Visa and MasterCard, can be used at ATMs in Luxembourg. Some machines also accept American Express, but this isn’t guaranteed.
Oddly for Europe, most Luxembourg banks charge a small fee to withdraw at another bank’s ATM, so you’re better off sticking to your own bank’s machines, where withdrawals are free.
Cash still has its place in Luxembourg, but you won’t need to carry much of it. Cards work almost everywhere, and mobile and contactless payments have become second nature.
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Taxes in Luxembourg
How you’re taxed in Luxembourg comes down to whether you count as a resident. You become a tax resident once you’ve lived in the country for more than six consecutive months, or if your permanent home is here. Residents are taxed on their worldwide income, while non-residents pay tax only on income earned within Luxembourg.
Income tax is progressive and can be anywhere between 0 and 42 percent, according to how much you earn. There’s also a solidarity surcharge of 7 to 9 percent of the tax due, which the government uses to finance the employment fund. Social security contributions come out of your salary as well, and they cover health, pension, and long-term care insurance.
Highly skilled staff recruited from abroad may qualify for Luxembourg’s impatriate tax regime. Half your eligible gross salary can be exempted from income tax, up to an annual cap. To qualify, you’ll need to become a Luxembourg tax resident and earn above a set minimum salary, and you can’t have lived or paid tax in the country in the years just before your move. You can claim the relief for up to the first eight years. It’s your employer’s responsibility to apply, so flag it with them if you think you might be eligible.
Expat tax can get complicated fast, especially once foreign income or cross-border commuting enters the picture, so it’s a good idea to talk to a tax adviser who specialises in expat cases.