Luxembourg

Luxembourg taxes its corporate residents on their worldwide income and non-residents only on Luxembourg-source income.

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 200,001 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 6.75% municipal business tax rate applicable).

On 11 June 2024, during his speech on the State of the Nation, the Luxembourg Prime Minister has announced a reduction of the CIT rate from 17% to 16% as of 1 January 2025.

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 It has been replaced by a minimum net wealth tax (see Net wealth tax [NWT] in the Other taxes section).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

Taking into account the solidarity surtax, the aggregate CIT rate is 18.19% for companies with taxable income in excess of EUR 200,001.

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%.

The effective combined CIT rate (i.e. CIT, solidarity surtax, and municipal business tax) for Luxembourg City is 24.94%.