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Luxembourg — Orbitax Corporate Tax Rates


  • Statutory Tax Rate17
  • Surtax Based on Taxable Income6.75
  • Surtax Based on Statutory Tax7
  • Surtax Deductible from Taxable Income0
  • Statutory Tax Deductable0
  • Effective Tax Rate24.94

Statutory Tax Rate

The general corporate income tax rate is reduced from 18% to 17% in 2019. A 7% surcharge for the employment fund is levied on the corporate income tax due, making the effective rate 18.19%. A municipal business tax is levied on all business establishments located in Luxembourg, including those of a tax-transparent entity (e.g. partnership), which carry on commercial activity in Luxembourg. This tax is in addition to corporate income tax. The tax is computed following the rules for the corporate income tax, with certain exceptions. A basic deduction of EUR 17,500 generally applies. The basic rate of the business tax is 3%. It is multiplied by coefficients determined by the municipality in which the business establishment is located. These coefficients vary from 2.25 to 3.5. The effective rate for the City of Luxembourg is 6.75% (3 x 2.25). The tax is not deductible for corporate income tax purposes. The combined corporate tax rate for the City of Luxembourg is 24.94%. This rate comprises the 17% corporate income tax and the 7% surcharge for the employment fund thereon (total 18.19%) and 6.75% municipal business tax.

For small companies, a reduced rate of 15% applies for taxable income not exceeding EUR 175,000 (increased from EUR 25,000 in 2019). Effective 1 January 2019, the tax is set at EUR 26,250 plus 31% of income exceeding EUR 175,000 when taxable income is between EUR 175,000 and EUR 200,000 (standard 17% rate applies when taxable income exceeds EUR 200,000).