Post-Brexit, Luxembourg becomes insurance company hotspot

in Luxembourg, Tax, 29.03.2017

Among the numerous reasons why Luxembourg has been so popular for insurance companies post-Brexit is its stable and favourable tax system. More specifically, Luxembourg’s insurance premium tax (“IPT”) has proven to have several advantages:

  • Luxembourg has one of the lowest IPT rates in Europe (4% in general in 2017: 0% for life-insurance and 6% for Fire Brigade Tax).
  • No adverse changes in the applicability of the Luxembourg tax regime are foreseen.
  • These rates have been stable since 1937. Eighty years—this is what we call stability in Luxembourg!
  • Subsequent to recent changes in the law, no tax representative is needed anymore in Luxembourg for insurance companies operating within the FOS regime. This translates into a cost reduction for such insurance companies.
  • From an operational point of view, classical setups involving a Luxembourg head office with branches in other EU Member States need only register for IPT purposes at the level of the Luxembourg head office—no separate registration is needed at the level of the branches. The Luxembourg IPT authorities being quite experienced and organised, this is generally a smooth and easy process.
  • On the compliance side, only one IPT return per legal entity (including branches) need be filed.

As of late March, seven insurers are eying or have confirmed a move to Luxembourg.

There are plenty of other reasons why Luxembourg should be considered as the right location to perform insurance business across the EU post-Brexit. Click here to learn more.

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