Luxembourg

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 It has been replaced by a minimum net wealth tax (see Net wealth tax [NWT] in the Other taxes section).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

Luxembourg has enacted legislation implementing the Organisation for Economic Co-operation and Development's (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 2024 and 2025 to incorporate OECD administrative guidance issued throughout 2023, June 2024, and January 2025. 

Luxembourg also transposed the ninth amendment to the Directive on Administrative Cooperation (DAC9) into national law, with entry into force on 1 January 2026, establishing a system for the automatic exchange of information related to OECD/G20 Pillar Two rules.

Under DAC9, in-scope groups should file a standardised GIR. The framework enables centralised filing of the GIR and mandates automatic information exchange among EU Member States, streamlining compliance and promoting consistency across jurisdictions. Filing responsibilities generally follow the Pillar Two architecture and may fall on the ultimate parent entity, a designated filing entity, or a local entity where required.

Administrative requirements

Luxembourg’s Pillar Two compliance framework is structured around three core obligations: registration, the GloBE Information Return (GIR), and local top-up tax returns. While registration constitutes a universal entry point requirement, the extent of reporting and filing obligations is largely driven by the group’s organisational set-up and the allocation of top-up tax to Luxembourg entities, reflecting a coordinated and pragmatic approach to compliance.

Key features

Registration

Luxembourg constituent entities are required to complete a registration. As part of this process, entities must also indicate the jurisdiction and entity responsible for filing the GIR, thereby embedding the notification requirement within the registration itself.

GIR

With respect to the GIR, no systematic local filing of the GIR is required where the conditions for centralised filing are met. In practice, Luxembourg constituent entities may rely on a GIR filed in another jurisdiction, provided that the relevant notification is made to the Luxembourg tax authorities as part of the registration process. This notification must identify the filing entity and the jurisdiction in which the GIR is submitted.

Local top-up tax returns

Local top-up tax returns are not automatic and are generally only required where Luxembourg entities are effectively subject to or allocated top-up tax under the IIR, UTPR, or QDMTT. Where no tax arises, no filing is generally required; however, certain situations may still trigger nil return obligations, for instance where the application of specific mechanisms (such as the substance-based income exclusion) results in no top-up tax being due. The rules also provide for the possibility to centralise the filing and payment of QDMTT and UTPR top-up tax through a designated Luxembourg entity, thereby simplifying compliance for groups with multiple entities in Luxembourg.

Filing deadlines

Luxembourg follows the standard Pillar Two timeline, with filings due 15 months after the end of the fiscal year, extended to 18 months for the first  year. For groups with a calendar year-end, this results in a first filing deadline of 30 June 2026 in respect of the 2024 financial year. This deadline covers the full set of obligations, including registration, GIR notification/filing (where applicable), and local top-up tax returns. Payment of any top-up tax is due within one month of the filing of the GIR.

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.