Luxembourg

Standard Corporate Income Tax Rate:
Luxembourg taxes the worldwide income of its business residents, while non-residents are only taxed on Luxembourg-source income.

As of tax year 2025, businesses with taxable income not exceeding 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.

Additional Tax
The employment-fund surcharge is 7% of the corporate income tax amount.

Municipal Business Tax
Municipal business tax for Luxembourg City is 6.75%. The effective combined CIT rate (CIT, employment-fund surcharge, and municipal business tax) in Luxembourg City is 23.87% as of tax year 2025.

Luxembourg VAT Overview:
Goods and services occurring in Luxembourg at the standard rate of 17%

1. VAT is subject to 14% on certain transactions (e.g., management and custody of certain wines, advertising brochures, securities)
2. 8% (e.g., gas or electricity supply)
3. 3% (food [except most alcoholic beverages]); Pharmaceuticals; Books (including e-books) books; radio and television programs (other than adult entertainment); Shoes, accessories and clothing for children under 14 years old.

Payroll Tax:
Payroll taxes must be withheld and paid by the employer. The tax rate is based on the employee's income, with the highest payroll tax rate being 42%. In addition, an employment-fund surcharge of 7% of the income tax applies, 9% above an adjusted taxable income of EUR 150,000 (tax classes 1 and 1a) or EUR 300,000 (class 2).

Social security insurance:
The social security contributions that employees must contribute are as follows:

1. Health insurance (employee share): 3.05% regular salary, monthly ceiling EUR 13,856.63 from 1 June 2026.
2. Pension: 8.5% of total remuneration, monthly ceiling EUR 13,856.63 from 1 June 2026.

Overview of import and export taxes:
Many imported goods from outside the EU are subject to customs duties and excise duties. The tariffs and rates applied to different goods vary widely and change frequently.
Excise duty is levied on certain consumer goods such as cigarettes, cigars, mineral oil, alcohol products. If it is used only as a raw material, no consumption tax is levied. If the goods are exported, the excise duty can be refunded.

Payroll taxes have to be withheld by the employer. The top payroll tax withholding rate is 42%. An employment-fund surcharge of 7% of the income tax must also be applied, 9% above an adjusted taxable income of EUR 150,000 (tax classes 1 and 1a) or EUR 300,000 (class 2).