Luxembourg

Overview

Last reviewed - 16 January 2020

Luxembourg, a landlocked country in Western Europe, is bordered by France, Belgium, and Germany. The official languages of Luxembourg are Luxembourgish, French, and German.

Founded in 963, Luxembourg became a grand duchy in 1815 and an independent state under the Netherlands. Full independence was attained in 1867. Overrun by Germany in both world wars, it ended its neutrality in 1948 when it entered into the Benelux Customs Union and when it joined the North Atlantic Treaty Organization (NATO) the following year. In 1957, Luxembourg became one of the six founding countries of the European Economic Community (later the European Union [EU]). In 1999, Luxembourg adopted the euro (EUR) as its currency.

Luxembourg is divided into three districts, with the city of Luxembourg as the capital. The small, stable, high-income economy, benefiting from its proximity to France, Belgium, and Germany, has historically featured solid growth and low unemployment. The industrial sector, initially dominated by steel, has become increasingly diversified to include chemicals, rubber, and other products. Growth in the financial sector, which now accounts for more than 30% of gross domestic product (GDP), has more than compensated for the decline in steel. Most banks are foreign owned and have extensive foreign dealings. The economy depends on foreign and cross-border workers for about 70% of its labour force.

Even though Luxembourg was impacted by the global economic crisis that began in 2008, the country continues to enjoy a high standard of living and significant growth.

Located at the heart of Europe, Luxembourg has established a reputation as a favoured location for a wide range of international companies from a variety of sectors with diverse business models. Luxembourg provides companies with the capability to establish and adopt business, regulatory, and tax framework for added-value activities in Europe and beyond. Luxembourg is a unique gateway to the European market, 500 million plus consumers (and around 70% of the EU's wealth) are concentrated in a 700-kilometre area around the Grand Duchy.

Luxembourg's success can be attributed to a succession of positive, long-term, focused, and innovative government policies aiming to enhance business and diversity of the country's economy. This approach has allowed Luxembourg to offer companies exceptional opportunities for doing business in Europe. These opportunities include its international and highly skilled labour force, high return on investment, easy access to government bodies, and a very attractive and stable legal and tax framework.

The political stability of Luxembourg is supported by a political culture of consensus where the parties coexist within the context of a broader agreement on key issues. Such stability is a key component of Luxembourg's development.

PwC Luxembourg has about 2,700 professionals from 75 different countries. PwC firms provide industry-focused assurance, tax, and advisory services to enhance value for their clients.

Quick rates and dates

Corporate income tax (CIT) rates
Headline CIT rate (%) 24.94% on a combined basis (CIT, solidarity surtax, and municipal business tax [Luxembourg City])
Corporate income tax (CIT) due dates
CIT return due date 31 May
CIT final payment due date By the end of the month that follows the month of tax assessment receipt.
CIT estimated payment due dates Quarterly instalments.
Personal income tax (PIT) rates
Headline PIT rate (%) 42, plus 9% solidarity tax
Personal income tax (PIT) due dates
PIT return due date 31 March
PIT final payment due date NP
PIT estimated payment due dates Quarterly
Value-added tax (VAT) rates
Standard VAT rate (%) 17
Withholding tax (WHT) rates
WHT rates (%) (Div/Int/Roy) Resident: 15 / 0 / 0;
Non-resident: 15 / 0 / 0
Capital gains tax (CGT) rates
Corporate capital gains tax rate (%) Capital gains are subject to the normal CIT rate.
Individual capital gains tax rate (%) Capital gains are subject to the normal PIT rate.
Net wealth/worth tax rates
Headline net wealth/worth tax rate (%) NA
Inheritance and gift tax rates
Inheritance tax rate (%) NP
Gift tax rate (%) NP

NA stands for Not Applicable (i.e. the territory does not have the indicated tax or requirement)

NP stands for Not Provided (i.e. the information is not currently provided in this chart)

All information in this chart is up to date as of the 'Last reviewed' date on the corresponding territory Overview page. This chart has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this chart, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.