Luxembourg has a developed economy and generally high wages, which leads to substantial tax revenue for the government. At the same time, Luxembourg aims to attract business and investment with competitive tax rates. Here is an overview of the Luxembourgish tax system.
Income Tax
Income tax rates in Luxembourg https://luxtoday.lu/en/knowledge/income-tax-in-luxembourg are progressive, with higher rates applying to higher levels of income. The rates for 2024 are:
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8% on income up to €11,265
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9% on income from €11,266 to €13,137
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10% on income from €13,138 to €15,010
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11% on income from €15,011 to €16,882
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12% on income from €16,883 to €18,755
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14% on income from €18,756 to €20,626
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16% on income from €20,627 to €22,469
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18% on income from €22,470 to €26,876
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19% on income from €26,877 to €69,504
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23% on income from €69,505 to €100,002
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26% on income from €100,003 to €150,000
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29% on income above €150,001
Income tax rates in Luxembourg are progressive, with higher rates applying to higher levels of income. The rates for 2024 are:
-
8% on income up to €11,265
-
9% on income from €11,266 to €13,137
-
10% on income from €13,138 to €15,010
-
11% on income from €15,011 to €16,882
-
12% on income from €16,883 to €18,755
-
14% on income from €18,756 to €20,626
-
16% on income from €20,627 to €22,469
-
18% on income from €22,470 to €26,876
-
19% on income from €26,877 to €69,504
-
23% on income from €69,505 to €100,002
-
26% on income from €100,003 to €150,000
-
29% on income above €150,001
Income tax rates in Luxembourg are progressive, with higher rates applying to higher levels of income. The rates for 2024 are:
-
8% on income up to €11,265
-
9% on income from €11,266 to €13,137
-
10% on income from €13,138 to €15,010
-
11% on income from €15,011 to €16,882
-
12% on income from €16,883 to €18,755
-
14% on income from €18,756 to €20,626
-
16% on income from €20,627 to €22,469
-
18% on income from €22,470 to €26,876
-
19% on income from €26,877 to €69,504
-
23% on income from €69,505 to €100,002
-
26% on income from €100,003 to €150,000
-
29% on income above €150,001
Corporate Taxes
Corporate income in Luxembourg is subject to:
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15% base rate for resident companies
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17% minimum rate for non-resident companies performing Luxembourg-sourced services
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29% for certain holding companies
Corporate income in Luxembourg is subject to:
-
15% base rate for resident companies
-
17% minimum rate for non-resident companies performing Luxembourg-sourced services
-
29% for certain holding companies
Corporate income in Luxembourg is subject to:
-
15% base rate for resident companies
-
17% minimum rate for non-resident companies performing Luxembourg-sourced services
-
29% for certain holding companies
Luxembourg also offers favorable investment and intellectual property tax incentives to attract multinational companies.
Luxembourg also offers favorable investment and intellectual property tax incentives to attract multinational companies.
Luxembourg also offers favorable investment and intellectual property tax incentives to attract multinational companies.
Value-Added Tax (VAT)
The standard VAT rate in Luxembourg is 17%. Reduced rates include:
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8% for tourism services, some transportation, and cultural events
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3% for food, pharmaceuticals, books, and other necessities
Luxembourg has minimum VAT rules for EU e-commerce sales.
The standard VAT rate in Luxembourg is 17%. Reduced rates include:
-
8% for tourism services, some transportation, and cultural events
-
3% for food, pharmaceuticals, books, and other necessities
Luxembourg has minimum VAT rules for EU e-commerce sales.
The standard VAT rate in Luxembourg is 17%. Reduced rates include:
-
8% for tourism services, some transportation, and cultural events
-
3% for food, pharmaceuticals, books, and other necessities
Luxembourg has minimum VAT rules for EU e-commerce sales.
Other Taxes
Additional taxes in Luxembourg include:
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Social security contributions
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Capital gains taxes from 25% to 50% of gains
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Inheritance tax from 1.8% to 14.4%
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Annual net wealth tax from 0.5% to 1.5% above €500,000
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Property taxes around 1% of assessed value
Payroll taxes and customs duties also apply in certain cases in Luxembourg.
Additional taxes in Luxembourg include:
-
Social security contributions
-
Capital gains taxes from 25% to 50% of gains
-
Inheritance tax from 1.8% to 14.4%
-
Annual net wealth tax from 0.5% to 1.5% above €500,000
-
Property taxes around 1% of assessed value
Payroll taxes and customs duties also apply in certain cases in Luxembourg.
Additional taxes in Luxembourg include:
-
Social security contributions
-
Capital gains taxes from 25% to 50% of gains
-
Inheritance tax from 1.8% to 14.4%
-
Annual net wealth tax from 0.5% to 1.5% above €500,000
-
Property taxes around 1% of assessed value
Payroll taxes and customs duties also apply in certain cases in Luxembourg.
Tax Calculator
The tax rules in Luxembourg can get quite complex with many variables affecting individual and corporate tax liabilities. For a quick reference, visit luxtoday.lu which has a user-friendly income tax calculator tool. Simply input your financial details and it instantly estimates your taxable income and taxes owed.
Taxes provide critical revenue for Luxembourg’s high-quality infrastructure and services. While at times complicated, the tax environment aims to spur economic prosperity. With some savvy planning and preparation, businesses and individuals can optimize their tax positions.
Frequently Asked Questions
1. How often do I need to file a tax return in Luxembourg?
Most taxpayers file annual tax returns in Luxembourg. Salaried employees may need to file tax returns quarterly. Companies often have monthly returns.
2. What deductions and credits are available to reduce my tax bill?
Common tax reduction opportunities include pension contributions, certain investments, electric vehicles, home loan interest, tuition fees, and charitable donations. Refer to the latest guides to maximize your deductions.
3. Do I need to report foreign income on my Luxembourg tax return?
Yes, any worldwide income needs declared, although double taxation treaties with certain countries apply. Speak to an advisor about your specific situation.
4. My business needs to register for VAT—what is the procedure?
You apply for VAT registration with the Luxembourg Registration Duties, Estates, and VAT Authority. The paperwork includes company ownership identification and projected turnover.
5. Are there planning strategies to minimize inheritance tax?
Yes, some common techniques include gift-giving to heirs before death, establishing appropriate wills and trusts, and utilizing tax exemptions. Consult an estate planning specialist for tailored tax optimization advice.
