The corporate tax in Luxembourg is one of the lowest in Europe, even after the recent modifications that have been implemented starting from 2025. Specifically, the lowest rate decreased from 15% to 14%. Below, our lawyers in Luxembourg explain how the corporate tax applies in the Grand Duchy. We are at your disposal with various services, including business registration and tax legislation advice.
Businesses subject to the corporate tax in Luxembourg
As in other countries, there are several types of companies one can open in Luxembourg. However, not all of them are subject to the same taxes. In the Grand Duchy, the following entities must pay the corporate tax:
- single-member public companies;
- simplified shareholder enterprises;
- single-member private limited liability companies;
- private limited liability companies with several shareholders;
- partnerships limited by shares;
- European companies.
If you want to open another type of business, such as a sole trader, we recommend discussing its tax implications with our lawyers in Luxembourg.
Corporate tax residence in Luxembourg
Even if the Luxembourg corporate tax rate is rather low, it is important to note that not all companies can benefit from it under the same conditions, as taxation here depends on the residency of the taxpayer. This principle applies to both businesses and individuals living in the Grand Duchy.
In the case of companies, corporate tax residency implies businesses that are registered here and those that have a management or central administration in Luxembourg. These will be imposed the corporate tax on their worldwide income. For companies that do not meet either of the two requirements, the tax will be levied on the income generated locally. This is often the case with branch offices of foreign companies operating in Luxembourg.
The management place principle implies companies with offices:
- where director board meetings occur;
- where general annual meetings of the shareholders occur;
- where accounting books and records are maintained;
- where the business is controlled.
If you need guidance in determining how the tax legislation applies to your company, our law firm in Luxembourg is at your service.
The corporate tax in Luxembourg and how it is levied
Companies subject to the corporate tax in Luxembourg must know that there are several rates that apply. The determination of the rate depends on the profits they generate, however, there are also a few other levies that need to be considered.
Here are the main rates at which the Luxembourg corporate tax applies:
- companies with an annual taxable income below EUR 175,000 are subject to a rate of 14%;
- companies that earn between EUR175,000 and EUR200,000 per year will pay a fixed amount of EUR24,500 plus a 30% corporate tax rate on income above EUR175,000;
- companies with income above EUR200,000 annually will be subject to a 16% rate.
In certain cases, companies may be subject to a minimum tax that is established based on the balance in the last annual accounts.
Please note that, in addition to the standard corporate tax in Luxembourg, solidarity surcharges also apply. In Luxembourg City, for example, the surcharge is 7%. Our law firm in Luxembourg is at the service of new business owners for whom this information is vital.
It should be noted that transparent enterprises – general and limited partnerships and European Economic Interest Groups – are not subject to the corporate tax in Luxembourg.
If you need more information on the Luxembourg corporate tax rate and how it is applied, our specialists can guide you. We can also provide information on the solidarity surcharge and the municipal business tax that needs to be paid.
The municipal tax applied to companies in Luxembourg
Luxembourg businesses must also pay a municipal tax, which is levied in the commune or city where they are registered. The rates of this levy are established by the municipality. The rates varied from 6.75% to 10%, the lowest being applied in Luxembourg City.
Based on this information, at the level of 2025, the corporate tax for companies in Luxembourg is made up of the following elements:
- the standard corporate tax;
- the solidarity surcharge;
- the municipal business tax.
Even so, opening a company in the Grand Duchy remains a great option for local and foreign entrepreneurs. They can rely on our Luxembourg lawyers for support with the incorporation.
The net wealth tax in Luxembourg
A few years ago, aside from the corporate tax, a net wealth tax was imposed on companies in Luxembourg. This levy is computed based on an annual assessment, as follows:
- the minimum amount to be paid is 4,815 euros, and it applies to certain companies;
- a rate of 0.5% applies on a net wealth base of 500 million euros;
- a rate of 0.05% applies on net wealth base of more than 500 million euros.
The Luxembourg net wealth tax’s tax base comprises the assets held by companies.
With respect to the Luxembourg corporate tax rate, you can obtain detailed information from our local law firm. We can also assist with registration with the tax authorities and obtaining VAT and EORI numbers when setting up a business in the Grand Duchy.
Corporate tax administration in Luxembourg
In order to determine the corporate tax in Luxembourg, a business must file various tax accounting documents based on the assessment of its profits during a financial year.
The financial year in Luxembourg is the same as the calendar year, which means that financial statements must be filed by the 31st of May of the current year for the previous one. Also, starting in 2017, all financial papers must be filed in electronic format.
Our law firm is at the service of clients with various services. One of the most appreciated ones in recent days is related to immigration to Luxembourg.
If you need a detailed guide on the Luxembourg corporate tax rate, we are at your disposal, so do not hesitate to contact us.