Corporate Income Tax (“CIT”)
A further reduction in Corporate Income Tax has been announced, effective January 1, 2025. The CIT rate will decrease as follows :
The updated tax rates are as follows:
A further reduction in Corporate Income Tax has been announced, effective January 1, 2025. The CIT rate will decrease as follows :
- From 17% to 16% for taxable income exceeding 200,000 EUR;
- From 15% to 14% for taxable income below 175,000 EUR.
The updated tax rates are as follows:
Such above rates are increased by 7% in favor of the employment fund.
Municipal Business Tax (“MBT”)
The Municipal Business Tax rates varies depending on the municipality where the company is established.
For example :
Taxation of Director’s fees (“Tantièmes”)
The taxation rate on Tantièmes varies depending whether it applies to the gross amount or if the company covers the tax on behalf of the recipient (net amount).
The applicable rates are:
For non-resident taxpayers, the withholding tax on Tantièmes is considered final if their professional income in the Grand-Duchy of Luxembourg consists solely of directors’ fees, and their annual gross earnings do not exceed 100,000 EUR.
Net Wealth Tax (“NWT”)
The NWT exists in Luxembourg since 1940 and was established with the philosophy that each legal or natural person <ith greater economic power should contribute more to society.
The NWT is assessed based on the financial situation declared as of January 1st of each year, with the following rates:
Assets exclusively subject to taxation in another jurisdiction are excluded from the NWT calculation. Companies can obtain a reduction of NWT by incorporating a reserve in their annual accounts (the “NWT Reserve”). This reserve is capped at 5 times the amount of the Corporate Income Tax of the previous year and must be maintained for 5 years. From 2025 onwards, the Minimum NWT will be 4,815 EUR for companies where financial assets constitutes at least 90% of the balance sheet, and the total balance sheet exceeds 2 million EUR¹.
For other situations, the Minimum NWT is as follows:
Municipal Business Tax (“MBT”)
The Municipal Business Tax rates varies depending on the municipality where the company is established.
For example :
- In Luxembourg City, the rate is 6,75 %;
- In Bettembourg, the rate is 10,5 %.
Taxation of Director’s fees (“Tantièmes”)
The taxation rate on Tantièmes varies depending whether it applies to the gross amount or if the company covers the tax on behalf of the recipient (net amount).
The applicable rates are:
- 20% on the gross amount,
- 25% on the net amount.
For non-resident taxpayers, the withholding tax on Tantièmes is considered final if their professional income in the Grand-Duchy of Luxembourg consists solely of directors’ fees, and their annual gross earnings do not exceed 100,000 EUR.
Net Wealth Tax (“NWT”)
The NWT exists in Luxembourg since 1940 and was established with the philosophy that each legal or natural person <ith greater economic power should contribute more to society.
The NWT is assessed based on the financial situation declared as of January 1st of each year, with the following rates:
- 0,5% on the portion of net wealth up-to 500 million EUR;
- 0,05% on the portion exceeding 500 million EUR.
Assets exclusively subject to taxation in another jurisdiction are excluded from the NWT calculation. Companies can obtain a reduction of NWT by incorporating a reserve in their annual accounts (the “NWT Reserve”). This reserve is capped at 5 times the amount of the Corporate Income Tax of the previous year and must be maintained for 5 years. From 2025 onwards, the Minimum NWT will be 4,815 EUR for companies where financial assets constitutes at least 90% of the balance sheet, and the total balance sheet exceeds 2 million EUR¹.
For other situations, the Minimum NWT is as follows:
Subscription Tax
The subscription tax is notably governed by the Law of May 11, 2007 of the Société de gestion de patrimoine familial, especially its article 5. The tax rate of the subscription tax is of 0,25 %. For further details on this type of entity, we invite you to explore our insight “The Société de Gestion de Patrimoine Familial (“SPF”) : A comprehensive guide”.
Value-Added Tax (“VAT”)
The VAT rates in the Grand-Duchy of Luxembourg are as follows:
Luxembourg has some of the lowest VAT rates in Europe. This, combined with the right to deduct VAT without specific restrictions on operating expenses, makes the country particularly attractive for businesses.
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The subscription tax is notably governed by the Law of May 11, 2007 of the Société de gestion de patrimoine familial, especially its article 5. The tax rate of the subscription tax is of 0,25 %. For further details on this type of entity, we invite you to explore our insight “The Société de Gestion de Patrimoine Familial (“SPF”) : A comprehensive guide”.
Value-Added Tax (“VAT”)
The VAT rates in the Grand-Duchy of Luxembourg are as follows:
- Standard rate: 17% (applies to all transactions not covered by the categories below);
- Intermediary rate: 14% (Solid mineral fuels, mineral oils and wood intended for use as fuel, Custody and management of securities, etc.);
- Reduced rate: 8% (hairdressing, gas, electricity, etc.);
- Super-reduced rate: 3% (Books, newspapers, water distribution, etc.).
Luxembourg has some of the lowest VAT rates in Europe. This, combined with the right to deduct VAT without specific restrictions on operating expenses, makes the country particularly attractive for businesses.
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Download PDF – Tax Guide 2025