Taxes in Luxembourg

Luxembourg tax rules cover personal income tax, corporate income tax, communal business tax, value-added tax (TVA), property tax, registration duties, inheritance and gift duties, customs duties and excise duties. Tax residence determines which income is considered, while the source of income and the legal form of a business affect the calculation. Municipalities also influence communal business tax and property tax. The main legal basis for income tax is the amended law of 4 December 1967 concerning income tax. The ACD handles personal income tax, corporate income tax, communal business tax, net wealth tax and wage withholding. The AED handles TVA, registration duties, inheritance and gift duties. The ADA handles customs and excise duties. MyGuichet.lu, eCDF and eTVA provide electronic filing routes, with LuxTrust or an electronic identity document required for procedures that use those authentication methods. Residents generally declare worldwide income, while non-residents are generally taxed on Luxembourg-source income. Personal income can arise from commercial activity, agriculture or forestry, self-employment, employment, pensions, capital, renting property and other sources. Taxpayers may be assessed jointly or individually depending on their status. From 2025, the progressive income-tax scale is 0% below EUR 13,230, then rises through bands from 8% to 38% up to EUR 54,090, 39% up to EUR 117,450, 40% up to EUR 176,160, 41% up to EUR 234,870 and 42% above EUR 234,870. The employment fund surcharge is 7%, rising to 9% above adjusted taxable income of EUR 150,000 for tax classes 1 and 1a or EUR 300,000 for class 2. Luxembourg has not charged net wealth tax on individuals since 2006. Employers withhold income tax from wages using the employee's fiche de retenue d'impôt and pay it to the ACD. When a person has several wages or pensions, the main tax card normally applies to the highest or most stable income, while additional cards use fixed rates of 33% for class 1, 21% for class 1a and 15% for class 2. Without a valid tax card, withholding is generally at least 33%. After affiliation with the CCSS, the tax card usually arrives after about 30 working days. A final adjustment or refund can be requested through modèle 100 or modèle 163 R, including through MyGuichet.lu, an electronic assistant, PDF or post. Deductions, tax credits and allowances depend on the taxpayer's status and facts. The annual personal income-tax return, modèle 100, is generally due by 31 December of the following year. For the 2025 tax year, the filing period runs from 7 April to 31 December 2026. Income-tax advance payments are generally due on 10 March, 10 June, 10 September and 10 December. Late filing or payment can lead to a surcharge, late-payment interest, a fine or an assessment based on an estimate. A balance shown on a tax assessment is generally due one month after the assessment is issued. A resident company is generally taxed on worldwide income, subject to treaty rules and exemptions for foreign permanent establishments. A non-resident company is generally taxed on Luxembourg income or income connected with a Luxembourg permanent establishment. An individual business or tax-transparent partnership normally passes its profit to the owner or partners for personal income tax, while a capital company or other opaque entity is generally subject to corporate income tax (IRC). From 2025, IRC is 14% on income up to EUR 175,000, followed by a calculation of EUR 24,500 plus 30% of the amount above EUR 175,000 for the EUR 175,000 to EUR 200,001 range, and 16% above EUR 200,000. The employment fund surcharge adds 7%. Communal business tax (ICC) is calculated from the taxable base, a 3% base rate and a municipal multiplier. The multiplier creates local differences: examples include 225% in Luxembourg City, producing 6.75%, 275% in Esch-sur-Alzette, producing 8.25%, and 300% in Troisvierges, producing 9%. The allowance is EUR 40,000 for taxpayers not subject to IRC and EUR 17,500 for other taxpayers. ICC advance payments are generally due on 10 February, 10 May, 10 August and 10 November. Companies generally file electronically, submit their annual return by 31 May and provide the balance sheet, profit-and-loss account, depreciation schedule and overhead information. IRC advance payments are generally due in March, June, September and December. Net wealth tax (IF) applies to opaque companies. A resident company is generally assessed on worldwide net wealth, while a non-resident company is assessed on Luxembourg net wealth. Individuals, individual businesses and transparent partnerships are not subject to this tax. A qualifying participation can be exempt when it represents at least 10% or has an acquisition cost of at least EUR 1,200,000 and satisfies the comparable foreign-tax condition of at least 10.5%. Companies generally file the IF return online, subject to stated exceptions such as certain partnerships, non-resident companies and cooperatives. TVA is Luxembourg's consumption tax. The standard rate is 17%, with reduced rates of 14%, 8% and 3% for defined goods and services. A business must register with the AED before issuing taxable invoices, report changes and cessation, issue compliant invoices, keep records for 10 years, file and pay periodic returns, and submit an annual return. Businesses with turnover below EUR 112,000 generally file annually; those above EUR 112,000 and below EUR 620,000 generally file quarterly and annually; those above EUR 620,000 generally file monthly and annually. EU recapitulative statements are generally filed monthly. eCDF and eTVA provide electronic filing routes, and payment is due with the relevant return. Other taxes include municipal property tax, subscription tax for certain investment or holding structures, dividend withholding tax, inheritance and gift duties, registration duties, customs duties and excise duties. A property purchase normally attracts 7% in registration and transcription duties, made up of 6% registration duty and 1% transcription duty. The Bëllegen Akt can provide up to EUR 40,000 per person for an owner-occupied property, subject to its conditions, with a minimum duty of EUR 100. Private capital gains can be taxable, including gains on a significant shareholding above 10% held within five years or a disposal within six months; an annual gain below EUR 500 is not taxable. Dividends from fully taxable companies may qualify for a 50% exemption under the applicable conditions. Luxembourg rental net income is generally taxed progressively. Inheritance returns are filed with the AED. The deadline is generally six months after a death in Luxembourg, eight months in Europe, 12 months in America and 24 months in Africa, Asia or Australia. Direct-line statutory inheritances and inheritances for spouses or partners have a 0% rate. Statutory inheritances for siblings are charged at 6%, extra-legal inheritances for siblings at 15%, and inheritances for other persons at 15%, with a progressive surcharge when the net share exceeds EUR 10,000. For a deceased person abroad, Luxembourg real estate remains relevant, while Luxembourg movable property is generally not relevant in the same way. Tax treaties allocate taxing rights and reduce double taxation. Employment income is generally taxed where the work is physically performed, so home-office days can affect allocation and employer duties. The 50 foreign working days sometimes used in cross-border assessments count only for the 90% tax-assimilation test and do not create a general allocation rule. A cross-border taxpayer may request tax assimilation through modèle 100 when at least 90% of total income is taxable in Luxembourg. A Belgian resident may alternatively qualify when at least 50% of household professional income is taxable in Luxembourg, or under the 90% test. Foreign income must be declared when tax assimilation is chosen, and treaty-exempt income can affect the applicable rate through progression rules. Companies and individuals may need to report cross-border arrangements to the ACD through MyGuichet.lu, although the reporting rules do not cover TVA, customs, excise duties or social contributions. Pillar 2 rules concern multinational enterprises and large domestic groups; registration and top-up-tax returns are filed through MyGuichet.lu, and a breach can lead to a fine of up to EUR 5,000. The ACD and AED may request supporting documents, accounting records and digital audit data, including through a FAIA VAT audit. A taxpayer can challenge a written ACD assessment by filing a reasoned written objection within three months. A telephone call or email is not sufficient, and the tax generally remains payable during the objection. The ACD normally decides within six months. A further appeal can be brought before the Administrative Tribunal within three months and then before the Administrative Court within 40 days. Tax registration itself is generally free, while a business permit carries a EUR 50 stamp duty; notary and adviser fees are separate from the tax amount.