Three generations of one family spend time together in the garden
Photo: Nader Ghavami
So, you’ve settled into Luxembourg, you have made friends and lead an active social life and your career is going well.
If you have children, they are happy at the school you have chosen. But what about financing their future education? And have you even considered your retirement? Or what happens if you have to move to another country or back to your country of origin?
Let’s face it, most of us don’t like to worry too much about the future. We can’t face getting older and many parents dread empty nest syndrome. And moving away from Luxembourg after several years of calling the country home is also a big step, especially if you are leaving behind good friends. But a certain amount of future planning is unavoidable for peace of mind and for the benefit of your children and their children.
First of all, get your taxes sorted. The Luxembourg tax system allows Luxembourg taxpayers to reduce their taxable income via special deductible expenses, including a number of financial products such as personal loans, outstanding balance life insurance, supplementary pension insurance and home savings plans.
Simône van Schouwenburg, in charge of business development at ING expat services, is very enthusiastic about home savings plans, which provide the possibility of potential additional tax reductions and allow investors to save for the purchase or renovation of their main residence, or to save on behalf of a child. “In other words, a home savings plan can be viewed as a savings book with tax benefits,” she says. “It is generally intended for the future acquisition or renovation of a property.” In fact, the saver must first save a predefined amount in order to subsequently obtain a loan granted by an accredited home savings bank--a caisse d’épargne logement--at a fixed rate, known from the outset.
The use of the loan after the savings period is not mandatory, it is merely an entitlement, van Schouwenburg explains. Indeed, if the potential loan is not taken up, the caisse d’épargne logement will grant a retrospective loyalty bonus on the amassed savings. ING offers savers a number of plans in conjunction with Bausparkasse Schwäbisch Hall, a German building society. Like many institutions, they offer variable and fixed-rate loans, as well as an interesting reviewable fixed rate option which allows savers to retain and then revise the interest rate they pay every 3, 5 or 10 years.
Saving for your child’s education can be fraught in a volatile economic climate. But a periodic investment plan allows savers to build up capital by investing in funds, which could prove attractive when the investment horizon is the medium or long term. “This solution is particularly appropriate when the client wishes to invest gradually in financial products, save to build up capital for a pension, save regularly for their children or grandchildren, or even finance a personal project,” says van Schouwenburg. Expats seeking life insurance products should also look for those with a guaranteed return or maybe combine that with investing in a Sicav, a type of investment fund. ING teams up with the insurer Bâloise Vie Luxembourg for its “Generation Pension Universal Life” product. But van Schouwenburg also says expats should seek out personal advisors on pensions, particularly if planning to transfer a life or pensions package to their country of origin, or a third country, if moving from Luxembourg after retiring.
The big move
If you are moving away, a signed declaration of departure must also be filed with your current commune at the latest one day prior to your move. In addition, third-country (i.e., non-EU) nationals who hold a residence permit but will be out of Luxembourg for more than six months should also return their permit to the directorate of immigration at the ministry of foreign and European affairs.
Even if you are simply moving within the country, you need to inform your local commune. They will deregister you if you are moving to another commune. At the new commune, a declaration of residence must be filed within eight days of moving into your new home.
Owners of vehicles registered in Luxembourg should contact the SNCA within one month of moving in order to update the address on their vehicle’s registration card, the famous grey card or “carte grise”.
And for those with children, it is also advisable to systematically keep the national fund for family allowances--the Zukunftskeess--informed of job, residency and other pertinent changes, as this may be a requirement to maintain any benefits you receive.