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Luxembourg
Corporate - Taxes on corporate income
Last reviewed - 29 July 2025Corporate income tax
Luxembourg taxes its corporate residents on their worldwide income and non-residents only on Luxembourg-source income.
Until tax year 2024 (included), businesses with taxable income lower than 175,000 euros (EUR) are subject to corporate income tax (CIT) at a rate of 15%. Businesses with taxable income between EUR 175,000 and EUR 200,001 are subject to CIT computed as follows: EUR 26,250 plus 31% of the tax base above EUR 175,000. The CIT rate is 17% for companies with taxable income in excess of EUR 200,000, leading to an overall tax rate of 24.94% in Luxembourg City (taking into account the solidarity surtax of 7% on the CIT rate and including the applicable 6.75% municipal business tax rate).
As of tax year 2025, businesses with taxable income lower than EUR 175,000 are subject to CIT at a rate of 14%. Businesses with taxable income between EUR 175,000 and EUR 200,001 are subject to CIT computed as follows: EUR 24,500 plus 30% of the tax base above EUR 175,000. The CIT rate is 16% for companies with taxable income in excess of EUR 200,000, leading to an overall tax rate of 23.87% in Luxembourg City (taking into account the solidarity surtax of 7% on the CIT rate and including the applicable 6.75% municipal business tax rate).
The CIT does not apply to tax-transparent entities (e.g. general or limited partnerships or European Economic Interest Groupings) unless they are subject to the reverse-hybrid rules.
Although there used to be a minimum CIT for Luxembourg resident companies, no such minimum CIT is applicable as of 2016. It has been replaced by a minimum net wealth tax (see Net wealth tax [NWT] in the Other taxes section).
Solidarity surtax
A 7% solidarity surtax is imposed on the CIT amount.
As of tax year 2025, considering the solidarity surtax, the aggregate CIT rate is 17.12% for companies with taxable income in excess of EUR 200,000.
Municipal business tax on income
Municipal business tax is levied by the communes and varies from municipality to municipality. The municipal business tax for Luxembourg City is 6.75%.
As of tax year 2025, the effective combined CIT rate (i.e. CIT, solidarity surtax, and municipal business tax) for Luxembourg City is 23.87%.
Pillar Two Implementation
Luxembourg has enacted legislation implementing the OECD’s Pillar Two rules, applicable to multinational enterprise (MNE) groups and large domestic groups with consolidated annual revenues of EUR 750 million or more in at least two of the four preceding fiscal years.
This legislation transposes Council Directive (EU) 2022/2523 of 14 December 2022, which aims to ensure a global minimum level of taxation for MNE groups and large-scale domestic groups operating within the European Union.
Key features of the Luxembourg Pillar Two framework include:
- Income Inclusion Rule (IIR): Applies to Luxembourg-headquartered MNE groups, requiring a top-up tax where foreign operations are taxed below the 15% minimum effective rate.
- Qualified Domestic Minimum Top-Up Tax (QDMTT): Ensures that low-taxed entities located in Luxembourg are subject to a domestic top-up tax, which takes precedence over the IIR and UTPR.
- Undertaxed Profits Rule (UTPR): Effective for fiscal years beginning on or after 31 December 2024, the UTPR allocates residual top-up tax among jurisdictions based on substance (employees and tangible assets).
- Transitional Safe Harbours: Luxembourg applies transitional safe harbour rules based on country-by-country reporting data, in line with OECD guidance, to reduce compliance burdens during initial implementation.
The initial law was enacted on 22 December 2023 and amended in December 2024 to incorporate OECD administrative guidance issued throughout 2023 and June 2024.
Administrative Requirements:
Luxembourg entities subject to Pillar 2 rules must register with the Luxembourg tax authorities by 30 June 2026. This registration is separate from the standard corporate tax registration and must include specific details listed in the law. Updates to this information may need to be reported annually, similar to country-by-country reporting.
Luxembourg entities that are part of a group with a calendar year financial year and fall under Pillar 2 rules from 1 January 2024 must file a GloBE Information Return (GIR) by 30 June 2026. Each Luxembourg constituent entity is required to file the GIR, unless one Luxembourg entity is appointed to file on behalf of all, or the ultimate parent or another designated entity files in a jurisdiction with Pillar 2 rules and automatic exchange of GIR information.
Eligible jurisdictions for external filing include EU member states that have implemented DAC 9 and other jurisdictions that have signed the OECD Multilateral Competent Authority Agreement (MCAA) for GIR exchange. Luxembourg signed the MCAA on 26 June 2025, enabling cross-border filing options.
For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.
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