Identifying and reporting dividend income
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As a resident taxpayer, any dividends paid out to you on shares you hold in a Luxembourg or foreign company as part of the management of your private assets are taxable.
Dividends paid to shareholders by Luxembourg companies whose registered office or central administrative entity is located in Luxembourg are subject to a 15% withholding tax calculated on the gross amount of dividends distributed.
Dividends paid to shareholders by foreign companies are in principle also subject to a withholding tax. This withholding tax is determined on the basis of the applicable legislation in the country where each company is based and/or in accordance with the agreement, if any, entered into between that country and Luxembourg to avoid double taxation.
Dividends paid out by Luxembourg or foreign companies that you receive must be declared on the income tax return and are subject to ordinary progressive tax rates (ranging from 0% to 42.80% or 43.60%). This income is also subject to a 1.4% long-term care insurance contribution. The contribution due in that regard is calculated by the Luxembourg Inland Revenue (Administration des contributions directes - ACD).
A tax exemption is allowed on 50% of dividend income from fully taxable capital stock companies (such as public limited companies (SA), limited liability companies (SARL), etc.) that are located in:
- in Luxembourg; or
- another EU Member State; or
- a country that entered into a double taxation avoidance agreement with Luxembourg.
The advance tax payment in the form of the withholding tax deducted by Luxembourg or foreign companies may in principle be set off against the final Luxembourg tax obligation when taxpayers file their tax returns. In the case of dividends paid by foreign companies, that amount may not be set off in full. In this case, the portion not covered is deductible as expenses incurred for the acquisition of income.
As a non-resident taxpayer, dividends received are, in principle, taxable in your country of residence. However, if you do not opt to be considered as a Luxembourg tax resident, you must declare these dividends in your income tax return.
Who is concerned
- the resident taxpayer; or
- the non-resident taxpayer who has opted to be treated as a Luxembourg resident for tax purposes;
who receives dividends from Luxembourg and/or foreign companies on shares held in the context of the management of their private assets.
How to proceed
Declaring dividends received on your income tax return
Taxable income
When you fill in your income tax return (see 'Online services and forms'), you must declare the dividends you received during the year under the heading 'net income from movable assets' ('revenu net provenant de capitaux mobiliers').
You must also complete Form 180 (see 'Online services and forms') if you receive dividends distributed by foreign companies located in a country with which Luxembourg has concluded a double taxation agreement. This annex, in table form, shows:
- the country of origin of the dividends;
- the type of income (dividends);
- the gross amount of income received;
- the 50% exemption: for dividends covered by the 50% exemption, you declare 50% of the gross amount of the dividends eligible for this exemption;
- expenses incurred for the acquisition of income (for example: safe-keeping charges or exchange fees). When the dividends are eligible for the 50% exemption, 50% of the expenses for the acquisition of income may be deducted;
- the net amount of dividends to be declared in your income tax return;
- the foreign withholding tax amount and the amount available as a tax credit.
In your income tax return, you must include the following information, based on the certificate provided by your Luxembourg and/or foreign bank:
- income subject to Luxembourg withholding tax: 50% of the gross amount of dividends received from a fully taxable Luxembourg company (such as an SA or SARL);
- income not subject to Luxembourg withholding tax, including:
- the amount of dividends paid by companies in countries with which Luxembourg has entered into double taxation avoidance agreements;
- the gross amount of dividends from countries not set out in the previous point. In this case, you must attach an annex stating the country from which the dividends originate, the gross amount of dividends received and the actual costs incurred in obtaining them (for example: safe-keeping charges or exchange fees).
Deductible amounts
Professional expenses (expenses for the acquisition of income)
On your income tax return, you can claim a deduction for costs incurred for the acquisition of income:
- bank charges;
- filing charges;
- debit interest;
- non-creditable foreign taxes, etc.
You are entitled to a minimum flat-rate allowance of EUR 25 per year on all investment income received during the year. This flat-rate allowance is doubled for married couples or civil partners filing joint tax returns. If the expenses for the acquisition of income are greater than the flat-rate allowance of EUR 25, the actual amount of these expenses should be reported;
Tax-free allowance
You are entitled to a tax-free allowance of EUR 1,500 per year on all your investment income (taxable interest and dividends) received during the year. This amount is doubled for married couples or civil partners filing joint tax returns;
Online services and forms
Who to contact
Luxembourg Inland Revenue (ACD) Contact Centre
- Address:
- 33, rue de Gasperich L-5826 Hesperange Luxembourg
- Phone:
-
(+352) 247 53 000
'Electronic assistant’ helpline available Monday to Friday from 7:45 to 17:00
Related procedures and links
Procedures
Links
Further information
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Détermination du revenu net provenant de capitaux mobiliers
sur le site de l'Administration des contributions directes (ACD)
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Frais d’obtention
sur le site de l’Administration des contributions directes (ACD)
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Affaires internationales
sur le site de l’Administration des contributions directes (ACD)
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Mémento fiscal - Résumé des impôts directs perçus
sur le site de l’Administration des contributions directes (ACD)
Legal references
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Loi modifiée du 4 décembre 1967
concernant l’impôt sur le revenu
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Circulaire L.I.R. n° 115/8 du 15 décembre 2008
Imputation et déduction des impôts étrangers en cas d’application de l’article 115/15a (exemption de 50% des revenus de capitaux mobiliers)
