For companies

Luxembourg offers numerous advantages for companies.

• Average social contribution rates
• Social security (excluding accident insurance) : 
  • Employee share: 12.45%
  • Employer share : 12.37% (based on absenteeism rate in class 1)

All resident commercial companies in Luxembourg are subject to corporate income tax (IRC), municipal business tax (ICC), and wealth tax (IF).

The IRC is set at:

• • 15% when the taxable income does not exceed €175,000
  • 17% when the taxable income exceeds €200,000
  • An additional 7% surcharge is applied to the IRC to fund the Employment Fund

A government proposal is under consideration to reduce this rate by 1% in 2025 and another 1% in 2026.

The municipal business tax applies only to commercial, industrial, mining, and artisanal companies located in the Grand Duchy of Luxembourg.

It aims to help municipalities finance their expenses, specifically the additional costs incurred by companies established in their territory (provision of industrial zones, parking spaces, specific measures to ensure the quality of the natural environment, etc.).

The ICC, based on the adjusted operating profit, is calculated from a tax base. In the city of Luxembourg, this rate is 3%.

The wealth tax is assessed based on a general tax base, that is, through the evaluation of taxable wealth. It applies to companies that are not fiscally transparent.
It is calculated based on the net assets as they appear in the balance sheet at the end of the taxable period.

The wealth tax is calculated according to the value of all properties, rights, and assets comprising the company’s estate on January 1st of each year, after deducting the debts on this estate. The minimum annual wealth tax is €535.

The annual contribution collected by the Chamber of Commerce is set at 2‰ (two per thousand) of the profit made during the penultimate fiscal year. The minimum contributions are as follows:

• €70/year minimum for a limited liability company (s.à.r.l.)
• €140/year minimum for a public limited company (S.A.)

The Luxembourg government has created a favourable framework for economic actors by establishing some of the lowest VAT rates in Europe, ranging from 3%, 8%, 14% to 17%, depending on the sectors.

To enhance Luxembourg’s competitiveness, the government has introduced a tax measure (Art 50ter L.IR) allowing for, under specific conditions, an exemption of 80% on income generated by patents and copyrights on software.

This legislation aims to encourage innovation. In practice, income generated from holding intellectual property rights can benefit from an attractive tax rate that can drop to around 6%, which is, in fact, one of the lowest rates in Europe.