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Taxation of investing in Luxembourg: what you should know
Investing in Luxembourg is fully legal and compatible with meeting all of your tax obligations. The key is knowing what to declare and where, because taxation depends on your country of tax residence.
If you are a Spanish tax resident
As a Spanish tax resident you are taxed on your worldwide income. Among other obligations, this means:
- Modelo 720: informational declaration of assets and rights held abroad when they exceed the legal thresholds.
- Taxation of income (interest, dividends, capital gains) in personal income tax under the rules in force.
- Possible application of the double-taxation treaty between Spain and Luxembourg.
If you live in Latin America, the Middle East or Europe
If your tax residence is outside Spain, you will be taxed under the rules of your jurisdiction and any applicable double-taxation treaties. Luxembourg, as a stable, AAA-rated European marketplace, is a frequent choice for international investors who want to custody their wealth inside the euro area.
Operational advantages to keep in mind
Beyond personal taxation, a private banking relationship in Luxembourg can offer operational efficiencies, such as diversified custody or the transfer of assets within the same banking group. The exact scope depends on your profile and residence, and should be assessed case by case.
Frequently asked questions
Do I have to declare a Luxembourg account in Spain?
Spanish tax residents must declare assets and rights held abroad above the legal thresholds via the modelo 720, and pay tax on the income obtained under the rules in force.
Is there double taxation between Spain and Luxembourg?
Spain and Luxembourg have a treaty to avoid double taxation. How it applies depends on the type of income and the investor's circumstances, so advice is recommended.
How is a Latin American investor taxed when investing in Luxembourg?
They will be taxed according to the rules of their country of tax residence and the applicable treaties. There is no single answer: each jurisdiction has its own rules.
Questions about your specific case?
Book a call and we will look, transparently, at how Luxembourg fits your wealth and tax situation.
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