Contract in Luxembourg - dodgy Swiss umbrella?

[radium]

I have been offered a 1 year contract in Luxembourg and the agent has put me in contact with his umbrella buddy in Switzerland.

They offer me 80% take home + 3.5% management fee. I was assured this is not using an offshore account and all legit... They said I would be an "international employee" as long as I wasn't resident in Luxembourg and that I renewed the contract every 6 months. That sounds like a lot of BS, I guess I would be liable for tax wherever I am resident anyway? What's the catch?

I've contacted another umbrella, based in Luxembourg, and they gave me a more realistic (although disappointing!) figure of about 60% take home + 10% fees for them. This includes paying all employee taxes in Luxembourg (+NI contributions, etc.) and assumes that I would be Luxembourg resident.

I've looked at setting up an Ltd in Luxembourg myself but this seems like a long process (several months) and would cost a few 1000 euros, so not really feasible before starting the contract.

So what's the truth on long term (>6months) contracting in Luxembourg? ~75% (after fees) seems way too good to be legit, and 50% quite disappointing...

[BlasterBates]

I would go for the safe solution.

I worked in Luxembourg for a while I thought the take home was higher. What you can do to improve it a bit is pay National Insurance in the UK, but you need some kind of subsiduary contract for a few days work in the UK. This is something I did, and although not completely above aboard, not comparable with paying no tax which is what the other solution appears to be.

The problem with these schemes is you never know when they're going to go wrong.

It might not be "illegal" but I bet you that the Lux. authorities will have a different view on your status. To gain exemption from tax you always need some approval from the tax authority. If they say "oh we don't need to", then in my view it doesn't work. I don't know any form of tax avoidance that doesn't need to be checked by the authorities, and you can't trust some dodgy guy from a brolly, who uses "loudness" to justify his approach. If there is a rule on avoiding tax then there has to be a rule on how to prevent it's abuse, and this usually means the authorities have the right to check up on you.

Another tip, if you can register as a "Grenzgänger" i,.e. you're normally resident elsewhere you ought to be able to claim your travel and hotel expenses. But you need proof that the hotel and travel was exclusively for business. They rejected my expenses because I didn't have proof. You might the need the help of a Lux accountant, because you ought to be able to offset these expenses.