Presented by Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

x €1, – voted2012 – draftDIFF. CORPORATE TAX1,526,316 16%1,631,579 16%105,263 7% PERSONAL TAX3,158,361 34%3,723,928 36%565,567 18% CRISIS TAX73,000 1%12,000 0%-61, % WITHHOLDING TAX80,000 1%85,000 1%5,000 6% WEALTH TAX180,000 2%230,000 2% 50,000 28% VAT & TAB2,973,176 32%3,248,936 31%275,759 9% CUSTOMS DUTIES1,234,875 13%1,333,895 13%99,020 8% OTHER112,948 1%120,913 1%7,965 7% TOTAL INCOME 9,338, % 10,386, % 1,047,575 11% Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.) Tax Rate Personal Tax Corporate Tax 2010 / resp % / 40.56% 28.59% / 28.80% BUDGETED INCOME

Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.) Proposed Tax Changes FROM 2012

 Crisis Tax 2011 and % – abolished from 01/01/2012  Tax Credit for hiring unemployed persons – extended to 31/12/ % of gross salary for 3 months – unemployed ≥ 3 months Unlimited contract or limited contract >18 months and > 16 hours/week  Aid for employing long term unemployment ≤ 30 years old unemployed ≥ 12 months EE+ER SOC. SEC. reimbursement 2 years ≤ 40 years old unemployed ≥ 3 months EE+ER SOC. SEC. reimbursement 3 years ≤ 45 years old unemployed ≥ 1 months EE+ER SOC. SEC. reimbursement to retirement Unlimited contract or limited contract >18 months and > 16 hours/week PERSONAL INCOME TAX CHANGES Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

SOCIAL SECURITY AT 01/10/2011  Minimum social salary 18 and over unqualified€1, and over qualified€2,162  Maximum contribution ceiling€9,007  Dependence insurance (1%) deduction€ 450  Crisis contribution (0.8%) deduction€1,801  Pension minimum (40 years contribution)€1,606  Pension maximum (40 years contribution at maximum)€7,435  Additional earnings (pension and revenue must not exceed)€2,141 BENEFITS Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

SOCIAL SECURITY AT 01/10/2011  Child allowance per month 1 child€185 2 children€440 Additional children, per child€362  Education allowance, once per year€485  Returning to school, once per year 1 child < 11 years old€113 1 child > 11 years old€161 Additional children, per child€ 80 BENEFITS Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

Draft Law 6336  Concerns old rental housing  Current situation –Repairs & Maintenance costs are tax deductible –Renovation costs are depreciated (2% per year) –Energy saving expenses are considered as renovation costs  In future, accelerated depreciation for energy saving expenses of 10% per year during 8 years, then 2% together with the building cost. ENERGY SAVINGS Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

It is proposed to amend Directive 2003/49/EC which introduced a withholding tax exemption on cross-border interest and royalty payments made between EU associated companies and to extend the scope of the Directive as follows:  To widen the set of eligible companies and include SE and SEC  To reduce the participation percentage from 25% to 10%  To broad the definition of “associated company” and include indirect shareholdings INTEREST & ROYALTIES DIRECTIVE Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.) TAX CHANGES 2011

Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.) PERSONAL INCOME TAX CHANGES  Tax Bands same as 2010 but additional Tax Band, of 39% on incomes over €41,793  Unemployment Surcharge to be increased in 2011 from 2.5% to 4% for all and 6% from €150,000 (€300,000 if joint taxation)  Temporary Crisis Tax to be set up for 2011 at 0.8% and abolished from 01/01/ RATEFROMTO 0%011,265 8%11,26513,173 10%13,17315,081 12%15,08116,989 14%16,98918,897 16%18,89720,805 18%20,80522,713 20%22,71324,621 22%24,62126,529 24%26,52928,437 26%28,43730,345 28%30,34532,253 30%32,25334,161 32%34,16136,069 34%36,06937,977 36%37,97739,885 38%39,88541,793 39%41,793

TAX CLASS DIFF. GROSS SALARY100, Social Contributions-10, Dependence Insurance-1, , Tax as per Tax Table-24, , Unemployment Surcharge Crisis Tax Net in the Pocket62, , PERSONAL INCOME TAX CHANGES Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

TAX CLASS DIFF. GROSS SALARY200, Social Contributions-11, Dependence Insurance-2, Tax as per Tax Table-62, , , Unemployment Surcharge-1, , Crisis Tax0.00-1, , Net in the Pocket122, , , PERSONAL INCOME TAX CHANGES Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

TAX CLASS DIFF. GROSS SALARY100, Social Contributions-10, Dependence Insurance-1, Tax as per Tax Table-15, , Unemployment Surcharge Crisis Tax Net in the Pocket71, , PERSONAL INCOME TAX CHANGES Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

TAX CLASS DIFF. GROSS SALARY200, Social Contributions-11, Dependence Insurance-2, Tax as per Tax Table-53, , , Unemployment Surcharge-1, , Crisis Tax0.00-1, , Net in the Pocket131, , , PERSONAL INCOME TAX CHANGES Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

GERMAN CROSS-BORDER EMPLOYEES Mutual agreement signed on between Germany and Luxembourg in connection with the existing DTT  Currently, a German resident working in Luxembourg pays tax on his salary in Luxembourg. However he should pay tax in Germany on the salary related to days travelling abroad and therefore spent outside Luxembourg.  If less than 20 days are spent abroad they can be ignored.  No difference is made between productive and unproductive days  Income is calculated as a prorata of working days spent abroad vs. contractually agreed total working days per month. Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

EXPATRIATE REGIME Circular 95/2 put in place fiscal measure to promote the hiring of highly skilled expert employees from abroad.  Concerns companies who employ at least 20 persons and who are part of an international group  Concerns employees who have + five years experience, earning + € 108, (€ 9,000 per month)  Tax exemption applicable to moving cost, travel cost, rental cost, tax equalisation, cost of living allowance, school fees… Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

NEW DOUBLE TAX TREATIES Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)  Applicable as from : –Armenia –Monaco –Qatar –Bahreïn –Liechtenstein  Applicable as from : –Barbados –Panama

Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.) TAX DEDUCTIONS 2011 DEDUCTIONS / TAX CLASS INVESTMENTS SINGLEMARRIED SPOUSE N/W WORKING SPOUSE MARRIED ONE CHILD MARRIED TWO CHILDREN Savings Life Insurance6721,34402,0162,688 Personal Pension Policy1,5003,0000 Company Complimentary Pension1,200 Building Society6721,34402,0162,688 Total Investment Deduction4,0446,8881,2008,2329,576 Return of Investment 38.95%1,5752, ,2063,730 OTHER DEDUCTIONS Interest paid on Personal Loans6721,34402,0162,688 Interest paid on Mortgages1,5003,00004,5006,000 Child Minder / Crèche / Cleaner3,600 0 Total Costs Deductions9,81614,8321,20018,34821,864 Total Tax Rebate 38.95%3,8235, ,1478,516

Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.) DEDUCTIONS / TAX CLASS INVESTMENTS SINGLEMARRIED SPOUSE N/W WORKING SPOUSE MARRIED ONE CHILD MARRIED TWO CHILDREN Total Cost Deductions9,81614,8321,20018,34821,864 PROFESSIONAL DEDUCTIONS Professional Expenses: Office, Courses, Subs540 Travel Expenses: travel home & work396 Employees’ Lump Allowance00000 Married Couple Allowance004,50000 Total Professional Deductions936 5, Total Deductions10,75215,7686,63619,28422,800 Tax Free in Tax Tables11,26522,5300 Tax Credit for Employees300 Tax Credit for Children ,845 Income Equivalent of Tax Credits789 3,2175,644 Total Semi-Net22,80639,0877,42545,03150,974 Social Security2,8044, ,5376,268 Gross Annual Tax Free Earnings25,61143,8948,33950,56857,242 Gross Monthly Tax Free Earnings2,1343, ,2144,770

NET SALARY RECEIVED & EMPLOYERS COSTS Karl Horsburgh Tax and Salary Services Sàrl (part of HT GROUP S.A.)

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