Luxembourg income tax return in 2025

The Luxembourg tax framework and reporting obligations

The existence of taxes dates back thousands of years, even before the formation of the first organized states. Since ancient times, taxes have been a tool for communities to collectively finance activities such as building infrastructure and providing essential services like education, health, security or social protection. Taxes thus represent a contribution by members of society according to their economic capacity to support the common good.

In this universal context, Luxembourg has developed a modern tax system adapted both to the needs of its national economy and to the requirements of international cooperation and the fight against tax evasion. Luxembourg's tax system is regulated by a broad set of laws and regulations, the most relevant being the following:

• Income Tax Law of 1967.
• Corporate Income Tax Law (IRC).
• General Tax Code (Abgabenordnung)
• Various provisions resulting from the transposition of international directives and agreements.

These taxes are classified into several categories, either at the personal or business level:

🙋🏻 Taxes for individuals

For individuals, the Income Tax Law (LIR) establishes eight categories of taxable income that determine the taxable income of each taxpayer:

• Commercial profits.
• Agricultural and forestry profits.
• Profits from the exercise of a liberal profession.
• Net income from a salaried occupation.
• Net income from pensions or annuities.
• Net income from movable capital.
• Net income from property rental.
• Miscellaneous net income.

🏢 Taxes for companies

In the corporate field, companies are subject to numerous taxes, although they fall into three basic categories:

• Corporate income tax (CIT): a direct tax levied on profits earned by companies in Luxembourg. As of 2025, the tax rate will be reduced by one percentage point to 14% for companies with a taxable income of less than 175,000 euros and 16% for companies with a taxable income of more than 200,000 euros. Between these two income levels there is a smoothing mechanism. A contribution to the employment fund must be added to this value, thus increasing the rate by 7% and increasing the normal tax from 16% to 17.12%.
• Communal business tax: this is a municipal tax on commercial activities, the value of which then depends on the municipality, in the municipality of Luxembourg it amounts to 6.75% and there is a tax allowance of 17,500 euros, although this applies only to sole proprietors and partnerships.
• Net wealth tax: this tax is levied on the net wealth of the company and its rate is 0.5% on the part of the net wealth less than or equal to 500,000,000 euros and 0.05% on the part of the net wealth greater than 500,000,000 euros.

Who is required to pay taxes in Luxembourg?

In Luxembourg both individuals and companies must pay taxes, although taxation varies depending on two factors: tax residence and source of income.

Obligations of tax residents

• Individuals: a person is considered a tax resident if he owns a home in such a way that it can be concluded that he/she will keep and use it or has his habitual residence in Luxembourg, a habitual residence being understood as a stay in Luxembourg of more than 6 consecutive months. These persons must declare and pay taxes on the totality of their worldwide income, that is, income generated both in Luxembourg and abroad.
• Companies: a legal entity is considered to be a tax resident if its registered office or central administration is located in Luxembourg. These companies must declare and be taxed on all their profits, irrespective of where they are generated.

Obligations of non-tax residents

• Individuals: individuals who do not meet the residence criteria, but obtain Luxembourg source income such as salaries, rents or investment income in Luxembourg, are obliged to declare and pay tax only on such income obtained in Luxembourg.
• Companies: Non-resident entities that generate income in Luxembourg or have a permanent establishment in Luxembourg are only taxed on income derived from their activities or investments in Luxembourg territory.

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Taxation modalities: Luxembourg tax return and withholding tax

In Luxembourg, income taxation is carried out in two different ways depending on the nature of the income and the tax situation: withholding tax and liquidation taxation. 

Withholding tax

This method consists of the automatic withholding of tax at the time of payment of certain income. In this case, the payer of the income, such as the employer, makes a deduction and pays it directly to the tax authorities before the beneficiary receives the net amount. Examples of this type of taxation are the income received from salaries and wages, some financial returns, pensions and other periodic benefits.

Filing a Luxembourg tax return is not required for most individuals whose income is subject to withholding tax only and whose income does not exceed certain thresholds or does not present complex tax situations.

Taxation based on declaration and assessment

Under this modality, it is the taxpayer himself, through an annual income tax return, who communicates to the tax authorities all his income, deductible expenses and personal situation. The tax authority analyzes the return, calculates the tax due and issues an assessment with the amount to be paid or refunded.

In addition, the following persons must also file an income tax return:

• Individuals whose taxable income exceeds 100,000 euros.
• Beneficiaries, in addition to income subject to withholding tax, of net income not subject to withholding tax of more than 600 euros.
• Beneficiaries of taxable income consisting in whole or in part of remuneration exempt from withholding tax or remuneration paid by employers or pension funds established abroad and not subject to withholding tax.
• Holders of at least one additional flat-rate withholding tax form, if taxable income exceeds 36,000 euros for taxpayers in tax classes 1 or 2, and 30,000 euros for those in tax class 1a.
• Recipients of net income over 1,500 euros subject to withholding tax on income from transferable securities.
• Beneficiaries of net income over 1,500 euros subject to withholding tax on directors' fees income.
• Married spouses, not living separately in fact, one of whom is a resident taxpayer and the other a non-resident, who wish to opt or have jointly opted for collective taxation, provided that the resident spouse earns at least 90% of the household's professional income in Luxembourg during the tax year.
• Partners who wish to opt or have jointly opted for either collective taxation or individual taxation with reallocation.
• Married people who wish to opt or have jointly opted for either pure individual taxation or individual taxation with reallocation.
• Holders of income from assets and certain pensions subject to the long-term care insurance contribution.

The income tax return: procedure and key steps

The income tax return process and the dates for filing are different for individuals and companies. Below are the details for each case. 

Income tax return for individuals 

Those who are required to file an annual income tax return in Luxembourg, as discussed in the previous sections, must do so no later than December 31 of the year following the tax year in question. For example, for the tax year 2024, the deadline for filing the tax return runs from April 7, 2025 to December 31, 2025.

It is possible to file the Luxembourg tax return online through an electronic assistant on the MyGuichet.lu platform or by filling out a form called “form 100” and sending it to the ACD. Those wishing to file online will need a 13-digit national identification number (matricule) and a LuxTrust product or a Luxembourg electronic identity card (eID) in order to create an account on MyGuichet.lu and sign the return electronically.

Making the declaration online is much easier as the platform guides you through the whole process by providing instructions and help at each step, all you have to do is follow the instructions at each stage and let yourself be guided by the wizard. In addition, it is possible to access a whole series of tutorials created by the ACD on how to complete the tax return using the electronic assistant.

Once the tax return has been completed using the MyGuichet.lu wizard, it must be signed using the authentication and electronic signature certificate contained in a LuxTrust product or a Luxembourg electronic identity card (eID).

Tax declaration for companies

Companies pay corporate income tax in advance on a quarterly basis following the schedule of dates provided by law. The amount of these advance payments is provisionally determined based on the most recent tax returns (corresponding to the previous fiscal year), and then adjusted automatically or at the company's request if necessary.

Conclusion

Understanding the legal basis of Luxembourg taxation, the entities subject to taxation in the country, the criteria of tax residency, the different taxation modalities and how they are carried out is indispensable for all those who live in the country or who have Luxembourg income.

This article has taken a general look at all these aspects, however, the complexity of the Luxembourg tax framework and its constant modifications make that in many occasions it is highly advisable to seek advice from a specialized professional. If this is your case and you think you need a hand, let us help you, EasyBiz is at your disposal.