Luxembourg
Corporate Tax Guide
Time of Update: 4/05/2026
Luxembourg offers a favorable tax environment with a combined corporate income tax rate of 23.87% in Luxembourg City (from tax year 2025), comprising 16% CIT, 7% solidarity surtax, and 6.75% municipal business tax. Companies with taxable income below EUR 175,000 pay 14% CIT, and those between EUR 175,000 and EUR 200,000 pay EUR 24,500 plus 30% on income above EUR 175,000. The standard VAT rate is 17%, the lowest in the EU. Non-residents are subject to a 15% withholding tax on dividends; no WHT applies to interest or royalties. EATR/EMTR data is not available for Luxembourg.
Luxembourg Corporate Income Tax (CIT)
General CIT Rate:
23.87% (CIT, solidarity surtax, and municipal business tax [Luxembourg City, from tax year 2025])
CIT Return Due Date:
December 31 of the following year.
CIT Payment Due Date:
At the end of the month following the receipt of the tax assessment receipt.
CIT Estimated Payment Due Date:
Quarterly installment payment.
Luxembourg Withholding Tax (WHT)
Resident Withholding Tax (Dividend/Interest/Royalty):
15/0/0
None-Resident Withholding Tax (Dividend/Interest/Royalty):
15/0/0
Luxembourg Value-Added Tax (VAT)
General VAT Rate:
17
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Luxembourg Capital Gain Tax (CGT)
General Capital Gain Tax Rate:
Capital gains are subject to the normal corporate income tax rate constraint.
Luxembourg Effective Tax Rate (ETR)
Composite Effective Average Tax Rate:
23.24%
Composite Effective Marginal Tax Rate:
18.09%
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TKEG Expat ™ Luxembourg Corporate Tax Guide
1.
Luxembourg corporate income tax
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 lower than EUR 175,000 are subject to CIT at a rate of 14%. Businesses with taxable income between EUR 175,000 and EUR 200,000 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 solidarity surtax 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, solidarity surtax, and municipal business tax) in Luxembourg City is 23.87% as of tax year 2025.
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 lower than EUR 175,000 are subject to CIT at a rate of 14%. Businesses with taxable income between EUR 175,000 and EUR 200,000 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 solidarity surtax 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, solidarity surtax, and municipal business tax) in Luxembourg City is 23.87% as of tax year 2025.
2.
Luxembourg VAT
Luxembourg VAT Overview:
Goods and services occurring in Luxembourg at the standard rate of 17% (EU minimum VAT)
Goods and services occurring in Luxembourg at the standard rate of 17% (EU minimum VAT)
- VAT is subject to 14% on certain transactions (e.g., management and custody of certain wines, advertising brochures, securities)
- 8% (e.g., gas or electricity supply)
- 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.
3.
Luxembourg labor tax
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, the solidarity tax is up to 9%.
Social security insurance:
The social security contributions that employees must contribute are as follows:
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, the solidarity tax is up to 9%.
Social security insurance:
The social security contributions that employees must contribute are as follows:
- Critical illness insurance: 3.05% regular salary, monthly cap of €10,709.97 (estimated annual cap of €128,519.64 as of January 1, 2020).
- Pension: 8% of total remuneration, capped at €10,709.97 per month (estimated annual cap of €128,519.64 as of January 1, 2020).
4.
Luxembourg import and export duties
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.
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.
5.
Payroll taxes
Payroll taxes have to be withheld by the employer. The top payroll tax withholding rate is 42%. A solidarity tax of a maximum of 9% of tax must also be applied.
