Bengaluru couple moves to one of world’s smallest countries for better quality of life, lower taxes

Prateek is a senior analyst with Amazon, while Neha works as a finance manager for a German real estate company. The NRI couple acknowledges that living in India would have resulted in bigger increments, while they could have earned more by moving to the United States or Dubai.

“Continuing in India or moving to the US would have given us more career and earning opportunities. But we wanted to taste the superior quality of life, which Europe offers,” Prateek explained to Live Mint. “Working class Indians don’t come to Europe for more money. We can easily earn 1.5-2 times more if we move to the US or Dubai. Needless to say, net savings would also be higher.”

Lower taxes, better services

Prateek and Neha pay about 28% of their income as tax, which is 2-3% less than what they would pay in India. However, even the relatively high 28% does not feel too much, thanks to the range of services they get in return.

“We have to mandatorily contribute 3% of our individual incomes towards government-sponsored health insurance. At just 3% cost, healthcare is entirely free for us, barring dental care,” Neha revealed.

Another feature of Luxembourg taxation that they appreciate is the unemployment fund, to which they both have to contribute 2% of their respective incomes.

“Under this scheme, if someone is fired, the government pays 80% of the last drawn salary for two years or until they find another job,” said Neha. “Think of it this way: at 5% of my annual income, I’m covered for two major emergencies – medical and job loss. We don’t have to separately build an emergency fund.”

Luxury cars, European holidays

For Neha and Prateek, another advantage of living in Luxembourg is affordable European holidays and being able to afford luxury cars. They own a Mercedes Benz A-class, which cost them around 43,000 euros. Adjusted for Purchasing Power Parity, 43,000 euros equates to about ₹10.3 lakh. However, a similar car in Bengaluru is actually priced at ₹55 lakh.

“I wouldn’t easily buy a luxury car in India priced over ₹50 lakh,” Prateek told Live Mint. “But these German luxury cars are priced much lower here in Luxembourg and are easily affordable vis-à-vis my income in euros.”

Purchasing Power Parity (PPP) is a method for comparing the value of different currencies by looking at how much a set of goods and services costs in each country. By adjusting for price level differences, it provides a more accurate picture of how far money goes in different countries.

“For the same reason, holidays in Europe are also affordable as we spend in the same currency we earn in. Of course, the proximity between different countries also makes it cheaper as we can just drive around,” Prateek explained.