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Corporate tax in Luxembourg in 2025
In this article, the features of the Luxembourg corporate tax rate will be explained. What kind of tax it is, who and when it should be paid, and go into the details about the basic and combined rates. In addition, a step-by-step algorithm for the actions to be taken for filling a tax return and paying income.
Corporate tax, one of the most important income taxes for the budget in Luxembourg. Who and when is obliged to pay it, what is the basic rate and is it possible to reduce the tax amount.
What is corporate tax in Luxembourg?
Сorporate tax, is a tax levied on the profits earned by companies during the financial year. This tax is paid on net profits minus any allowable business expenses. For example, in addition to standard expenses such as wages, equipment and office expenses, it is possible to deduct the cost of any gifts or donations, as well as tax losses from previous years.
Revenue from the corporate tax rate is one of the most important sources of income for the budget of the Grand Duchy. For companies, the Luxembourg corporate tax is also quite attractive.
The standard tax rate is relatively low compared to other European countries.
Companies can receive certain benefits and even exemptions if certain conditions are met.
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Read articleCorporate tax rate in Luxembourg in 2025
According to legal requirements, only resident companies have unlimited tax liability in Luxembourg. They are required to pay corporate tax on all their income, including income abroad. The Luxembourg net worth tax is not equal to the Luxembourg corporate income tax.
Foreign income may be exempt from tax if:
- the income was received in a country with which Luxembourg has an agreement to avoid double taxation;
- the company has a permanent establishment in that country.
Non-resident companies are taxed only on local income in Luxembourg.
Which companies are eligible for corporate tax
- single member public limited companies (SA) or public limited companies with up to 100 partners;
- simplified shareholder companies (société par action simplifiée - SAS);
- partnerships limited by shares (société en commandite par actions - SECA or SCA) with at least 2 partners, one limited partner and one general partner;
- single member limited liability companies (société à responsabilité limitée - SARL) or limited liability companies with several partners;
- simplified limited liability companies (société à responsabilité limitée simplifiée);
- single member European companies (société européenne - SE) or European companies with several partners.
Tax-transparent entities such as general or limited partnerships or European Economic Interest Groupings are not subject to tax. Luxembourg company tax rates are determined based on the amount of income of the company.
How Luxembourg corporate income tax rates are determined
| Rate | Comment |
| 15% | For profits up to €175,000 |
| €26,250 + 31% of the tax base above € 175,000 | For profits between €175,000 and €200,001 |
| 17% | For profits more €200,001 |
From the 2025 tax year, Luxembourg will reduce its basic corporate tax rates by 1%. They will amount to 14% and 16%.
Solidarity and Municipal Business Tax in Luxembourg
In addition to the corporate income tax in Luxembourg, there are two additional taxes: solidarity and municipal business tax.
Solidarity surtax at a rate of 7%. Taking into account the solidarity tax, the aggregate CIT rate is 18.9% for companies with an income of more than 200,001 euros.
Luxembourg’s municipal business tax is levied by communes; its rate depends on the municipality of the Grand Duchy in which the company operates. For example, the tax rate in Luxembourg City is 6.75%.
The effective final rate of the combined corporate tax for Luxembourg City (taking into account corporate tax, solidarity and municipal business tax) for companies with a high income level is 24.94%, for companies with an income of less than 175,000 euros - 22.8%.
Corporate tax exemptions and credits in Luxembourg
As in most countries, Luxembourg has some exemptions and credits for Corporate tax.
Companies can receive tax breaks for the following expenses:
- hiring the unemployed
- audiovisual or venture capital investments
- investment in continued professional education
- incentives for research and development.
In addition, a company can receive a 25% tax exemption on profits for up to 8 years, provided that it contributes to the development and improvement of the economy. The benefit applies to new companies or new processes.
Comparison with other European countries
In order to compare corporate tax rates in Luxembourg and the European countries closest to it, corporate tax rates of the major European countries, the following table is available.
Comparison of European corporate tax rates
| Country | Tax rate |
| Luxembourg | 15-17% (without taking into account solidarity and municipal business taxes) |
| Germany | 15,825% |
| France | 25% |
| Belgium | 25% |
| Netherlands | 25,8% |
Even taking into account solidarity and municipal business taxes, the corporate tax rate in Luxembourg remains lower than in most countries of the European Union.
Tax reporting and compliance in Luxembourg
Filing and paying tax is the responsibility of the company. To declare taxable income, contact Luxembourg Inland Revenue (ACD) The tax office will calculate the tax amount.
The financial year in Luxembourg
The tax year in Luxembourg runs from 1 January to 31 December. The tax return for the past year must be filed no later than 31 December of the current year. For example, the declaration for 2023 must be filed no later than 31 December 2024.
Legal entities are required to file corporate tax returns via the online assistant on the MyGuichet.lu website. The fields in the assistant are filled in automatically based on the imported XML file.
Companies that are exempt from mandatory online filing submit returns in paper format. These include:
- partnerships
- non-resident companies
- agricultural associations
- cooperative companies.
Depending on the type of company activity and tax scheme, the declaration will require the attachment of accounting documents that were used to calculate the company's financial results.
In the basic version, the package of documents includes:
- The balance sheet
- The profit and loss account
- Table of fixed assets and depreciations
- The financial statements of the overhead expenses.
- The Luxembourg Inland Revenue reserves the right to request additional documents to confirm the information specified in the declaration: statements, applications, declarations, claims or appeals submitted to its offices.
Paying Corporate tax
The peculiarity of corporate tax is that it is paid in advance. Companies pay it in advance and quarterly on the billing dates, starting in March. The amount of the payments is calculated on the basis of the tax return from the previous tax year.
Since payments are made in advance, sometimes there may be an overpayment or, conversely, an underpayment. In case of underpayment, the company is obliged to pay the remainder within one month from the date of receipt of the confirmation of the corporate tax return. In case of overpayment, the overpaid amounts can be returned to the company's account or deducted from the amount of another tax, for example, from the amount of net property tax.
In general, Luxembourg is considered a very attractive country in terms of corporate taxation. The Grand Duchy has managed to develop its own tax regime, which at the same time does not conflict with the EU tax policy as a whole, but makes the country a tax haven among other European countries.
Frequently Asked Questions (FAQ)
What is Corporate Tax in Luxembourg?
Corporate tax is a tax levied on the profits earned by companies during the financial year. This tax is paid on net profits minus any allowable business expenses.
What is the standard tax rate?
In 2024, the standard tax rate is between 15% and 17%, depending on the size of the company's profits. For companies with an annual profit of less than €175,000, the rate will be 15%, for companies with a profit of €175,000 to €200,001, the rate is €26,250 + 31% of the tax base above €175,000. For large companies whose profits exceed €200,001, the rate is 17%.
When should I file my tax return?
The tax return for the previous tax year must be filed no later than December 31 of the following year. For example, companies must file a return for 2023 by December 31, 2004.
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Source: Guide to the corporate tax rate in Luxembourg | Expatica , Luxembourg - Corporate - Taxes on corporate income , Luxembourg proposes reduction in corporate income tax rates and other changes | EY - Global, Corporate income tax - Guichet.lu - Luxembourg, Luxembourg Country Profile - KPMG International, Luxembourg Corporate Tax Rate, Corporate income tax (CIT) rates
We took photos from these sources: Behnam Norouzi on Unsplash
Authors: Jaap
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