The net wealth tax in Luxembourg is one of the main taxes in the country and refers exclusively to companies, either Luxembourg based, or Luxembourgish branches of non-resident corporations. Resident companies are taxed based on their global wealth, meaning both in the country and abroad. Non-resident countries are taxed based on their net income within Luxembourg.
Key features and benefits:
- On a taxable base of up to EUR 500 million: 0.5%.
- On the taxable base exceeding EUR 500 million: NWT of EUR 2.5 million, plus 0.05% on the component of the NWT base above EUR 500 million. No cap is set.
Who is eligible for the Luxembourg net wealth tax?
- SAs (sociétés anonymes) Public limited companies
- SEs (sociétés européennes) European companies
- SARLs (sociétés à responsabilité limitée) Limited liability companies
- SECAs (sociétés en commandite par actions) Companies limited by shares
- Opaque companies, which means they have an equity holding in a transparent company so they are eligible in respect of the amount of shares held, which can be determined by the ACD (Luxembourg Inland Revenue).
Very important to mention here who is not eligible for the net wealth tax as well:
- Individual companies
- Partnerships
- Civil companies
- De facto companies (société de fait)
- Capital pension savings companies
- Venture capital companies
- Family wealth management companies (SPF)
- Securitisation companies
- Investment funds
How to participate in the net wealth tax?
Net wealth tax is determined by using three different tax bases, where ‘tax base’ meaning gross assets minus liabilities and exemptions:
- The most common, general tax base, every three years
- The new tax base, referring to before the end of the 3year period
- And the special tax base when there is a personal exemption ending and/or a non-resident becomes resident or the other way around. This is based on taxable income at the start of the calendar year following the change of event - either end of exemption or change in the residency status
What are the assets included in the Luxembourg net wealth tax?
So, which assets count to be ‘eligible’ for the NWT? Mainly working income from commercial, industrial, mining and/or trading companies. Assets or economic units which do not fall into any of these categories cannot be included as ‘taxable income’. The Luxembourg Inland Revenue is conducting several assessments to determine if the assets are eligible for net wealth tax.
Those assessments happen every three years and they define the overall value of the company, simply put meaning, the price of that company in the case of a potential sale. This value or price consists of fixed assets including inventories, intangible items such as patents, copyrighted ideas and so on, and other assets such as insurance policies. Properties are valued separately as they fall under property tax. The only case where there is a change is if the value varies more than 75000 euros or one fifth of the company’s worth.
Regarding foreign assets, for resident companies the ones located abroad are usually tax exempt and for non-resident companies, again, the declarable assets are the ones based in Luxembourg.
How do companies declare net income
Who needs to declare it
All companies subject to Luxembourg net wealth tax would need to do their declaration online, on https://guichet.public.lu/ with the help of their virtual assistant. Some fields of the application can be automatically prefilled if an XML file is imported, as long as it is properly structured. There are some corporate entities though that they cannot pass through the mandatory online filing, and they have to continue their application in paper documentation. These entities are:
- Non-resident companies
- Coop companies
- Partnerships
- Agricultural associations
How is the amount calculated
The net wealth tax is calculated with this simple formula → tax base per rate of tax
Exemptions and reductions
There are quite a few exemptions or reductions of NWT, in some cases full but also partial. Let’s look at those cases.
Full exemption for holdings, for main companies and their subsidiaries:
- Resident capital companies
- EU companies: European Economic Area company or another European company covered by a specific tax agreement
- Capital companies based in a non-EU country with or without a tax agreement with Luxembourg, with the condition of a taxation comparison (for subsidiary regime).
Reductions providing the wealth remains for at least five years apply to:
- Resident companies
- Permanent establishments in Luxembourg for non-resident companies
In any of those cases, the conditions are to enter the income before the end of the following year, in a reserve account an amount which equals five times the reduction requested and to maintain this amount for the next five years. In case the company distributes part or all of this amount, the net wealth tax will be increased by one fifth of the amount used.
Minimum net wealth tax - What does it mean and how does it work
Minimum NWT means that there is a minimum fee which applies to all companies based in Luxembourg, incl. non-resident ones which have their central administration in Luxembourg. Those companies include those with fixed financial assets, inter-company receivables, transferable securities. Last May, a new draft law was proposed by the Luxembourgish government, altering the current minimum net wealth tax regime to align with the latest ruling of the Luxembourg Constitutional Court (more about recent changes below in FAQs).
From tax year 2025 on, the minimum NWT would amount to:
- EUR 535 for a balance sheet total up to and including EUR 350,000.
- EUR 1,605 for a balance sheet total exceeding EUR 350,000 up to and including EUR 2 million.
- EUR 4,815 for a balance sheet total exceeding EUR 2 million.The minimum NWT charge due by a tax unity is capped at EUR 32,100.
For more information regarding net wealth tax, minimum and eligibility, or help with your declaration please contact: Luxembourg Inland Revenue (ACD) Address: 33, rue de Gasperich L-5826 Hesperange Luxembourg. https://impotsdirects.public.lu/fr/profil/organigramme.html
