Business Taxation – Luxembourg
Corporate income tax 17% plus solidarity surcharge and municipal business tax. Effective combined rate 24-26% depending on municipality. Favorable IP regime and holding company structures.
Business Taxation
Corporate income tax 17% plus solidarity surcharge and municipal business tax. Effective combined rate 24-26% depending on municipality. Favorable IP regime and holding company structures.
Corporate Income Tax 2026
Applied to taxable profits of Luxembourg companies and permanent establishments of foreign companies. Solidarity surcharge 7% additional (effective 18.19% combined).
Depends on municipality. Luxembourg City: 6.75%. Combined with CIT: effective total rate approximately 24.94% in Luxembourg City, up to 26% in other municipalities.
Minimum annual corporate income tax for fully taxable companies with financial assets over €350,000. €535 minimum for smaller companies.
IP Regime and Incentives
Qualifying intellectual property income can be 80% exempt from tax. Must meet nexus requirements. Effective rate as low as 5% on IP income. Significant advantage for tech companies.
Credit against tax liability for qualifying R&D expenses. 20% for large companies, 35% for SMEs. Can be carried forward.
Dividends and capital gains from qualifying participations (10%+ or €1.2M+ investment) fully exempt. Makes Luxembourg attractive for holding companies.
Self-Employment
Self-employed individuals taxed at progressive personal income tax rates on net business income. Same brackets as employment income. Can deduct business expenses.
New self-employed may benefit from reduced social security contributions during startup phase. Must apply. Can significantly reduce initial burden.
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