EasyBiz Team

The municipal business tax and its legal framework

In Luxembourg, municipalities are autonomous local authorities with their own legal personality and manage their own assets and interests through local representatives under the supervision of the central government. To carry out their tasks, the municipalities are provided with financial resources from three sources:

The municipal business tax is thus part of the local taxes that constitute, together with real estate taxes, the second source of revenue for municipalities in Luxembourg.

The municipal business tax is a tax levied exclusively on the profits of commercial enterprises. Its specific purpose is to help municipalities finance additional expenses generated by companies established on their territory such as the provision of industrial parks, the construction of parking spaces or the implementation of specific measures to ensure the quality of the natural environment, among many other services.

In Luxembourg, the municipal business tax is mainly regulated by the General Tax Law and its subsequent amendments. This law establishes both the legal basis for its implementation and the details on the determination of the tax base and the applicable rates. In addition, the municipal business tax is also governed by specific rules in the Municipal Tax Code, which allows each municipality to define the tax rate applicable in its jurisdiction.

Tax calculation and rates

The municipal business tax is a tax levied on the commercial activity of companies in Luxembourg and since it is a communal tax its rate varies depending on the municipality where such activity is carried out. The municipal business tax is calculated by multiplying the taxable base by the tax rate. Let's see then how to calculate each of these factors:

Tax base

To calculate the tax base we start from the business profit, then we add:

Finally, a tax allowance of 40,000 euros is applied for taxpayers not subject to corporate income tax or 17,500 euros for others.

Tax rate

The municipal business tax rate is not uniform throughout Luxembourg, as each municipality sets its own rate. This rate is made up of two factors, a national basic rate and a municipal multiplier:

In the Luxembourg commune, the multiplier factor is 225%, when this value is multiplied by the national base rate, the final rate of 6.75% is obtained.

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Tax declaration and payment

The municipal business tax return is integrated with the corporate income tax return. When the company declares its taxable income to the Luxembourg Inland Revenue, it will calculate both the municipal business tax and the corporate income tax.

This declaration is normally made electronically using the <a href="https://redirect.myguichet.lu/procedure/init/?serviceType=ACD_PM_2017">online input assistant on MyGuichet.lu</a>. However, associations, non-resident companies, agricultural associations and cooperative societies must continue to file the return on paper. This form can be downloaded from the <a href="https://impotsdirects.public.lu/fr/formulaires/collectivites.html">dedicated LIR page</a>.

The return must be filed no later than May 31 of the year following the tax year in question and payment of the tax is made with quarterly advance payments on February 10, May 10, August 10 and November 10. The final balance is paid upon receipt of the tax form.

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.

The tax applies to all <a href="https://easybiz.lu/en/blog/register-a-company-in-luxembourg">businesses operating in Luxembourg</a>, whether resident or non-resident, as long as they have a fixed establishment or permanent presence generating income within the country. This includes corporations, partnerships, branches, and certain non-resident businesses if they are actively conducting commercial activities in Luxembourg.

The taxable base is calculated by adjusting the company’s net profit according to Luxembourg's tax rules. After these adjustments, the taxable base is subject to the municipal tax rate, which varies according to the municipality.

Each municipality in Luxembourg has the authority to set its own tax multiplier on the national base rate, which is fixed at 3%. For example, the City of Luxembourg uses a multiplier of 225%, leading to an effective rate of 6.75%, while other municipalities, such as Esch-sur-Alzette, apply higher multipliers. This flexibility allows municipalities to adjust tax rates based on local economic conditions and budget needs.

We will explain what this tax refers to, what is the tax rate, how to declare it and other details.

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La taxe professionnelle communale et son cadre juridique

Au Luxembourg, les communes sont des autorités locales autonomes dotées d'une personnalité juridique propre et gèrent leur patrimoine et leurs intérêts par l'intermédiaire de représentants locaux sous la supervision du gouvernement central. Pour mener à bien leurs missions, les communes disposent de ressources financières provenant de trois sources :

La taxe professionnelle communale fait donc partie des impôts locaux qui constituent, avec la taxe foncière, la deuxième source de revenus des communes luxembourgeoises.

La taxe professionnelle communale est un impôt prélevé exclusivement sur les profits des entreprises commerciales. Son but spécifique est d'aider les communes à financer les dépenses supplémentaires générées par les entreprises établies sur leur territoire, telles que l'aménagement de parcs industriels, la construction de places de parking ou la mise en œuvre de mesures spécifiques pour assurer la qualité de l'environnement naturel, parmi bien d'autres services.

Au Luxembourg, la taxe professionnelle communale est principalement régie par la loi générale des impôts et ses modifications ultérieures. Cette loi établit à la fois la base légale pour sa mise en œuvre et les détails sur la détermination de la base d'imposition et des taux applicables. En outre, l'impôt commercial communal est également régi par des règles spécifiques dans le Code des impôts communaux, qui permet à chaque commune de définir le taux d'imposition applicable dans sa juridiction.

Calcul de l'impôt et taux

La taxe professionnelle communale est un impôt prélevé sur l'activité commerciale des entreprises au Luxembourg et comme il s'agit d'un impôt communal, son taux varie en fonction de la commune où l'activité exercée. La taxe professionnelle communale est calculée en multipliant la base imposable par le taux d'imposition. Voyons donc comment calculer chacun de ces éléments :

Base imposable

Pour calculer la base imposable, on part du profit de l'entreprise, puis on y ajoute :

Enfin, un abattement fiscal de 40,000 euros est appliqué pour les contribuables non assujettis à l'impôt sur les sociétés et de 17,500 euros pour les autres.

Taux d'imposition

Le taux de la taxe professionnelle communale n'est pas uniforme sur l'ensemble du territoire luxembourgeois, chaque commune fixant son propre taux. Ce taux est composé de deux facteurs, un taux de base national et un multiplicateur communal:

Dans la commune de Luxembourg, le facteur multiplicateur est de 225 %. Lorsque cette valeur est multipliée par le taux de base national, on obtient le taux final de 6,75 %.

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Déclaration et paiement de l'impôt

La déclaration de l'impôt commercial communal est intégrée à la déclaration de l'impôt sur le revenu des personnes morales. Lorsque la société déclare ses revenus imposables au Ministère des finances du Luxembourg, celui-ci calcule à la fois la taxe professionnelle communale et l'impôt sur le revenu des collectivités.

Cette déclaration se fait normalement par voie électronique à l'aide de l'<a href="https://redirect.myguichet.lu/procedure/init/?serviceType=ACD_PM_2017">assistant de saisie en ligne sur MyGuichet.lu</a>. Toutefois, les associations, les sociétés non-résidentes, les associations agricoles et les sociétés coopératives doivent continuer à déposer la déclaration sur papier. Ce formulaire peut être téléchargé à partir de la&nbsp;<a href="https://impotsdirects.public.lu/fr/formulaires/collectivites.html">page dédiée au LIR</a>.

La déclaration doit être déposée au plus tard le 31 mai de l'année qui suit l'exercice fiscal concerné et le paiement de l'impôt s'effectue par acomptes trimestriels les 10 février, 10 mai, 10 août et 10 novembre. Le solde est payé à la réception de la fiche d'imposition.

Le montant de ces acomptes est déterminé provisoirement sur la base des déclarations fiscales les plus récentes (correspondant à l'exercice précédent), puis ajusté automatiquement ou à la demande de l'entreprise si nécessaire.

Que couvre cette taxe, quel est son taux d’imposition et d’autres détails.

Taxe professionnelle communale au Luxembourg

Municipal business tax in Luxembourg

What are holding companies?

Holding companies are legal entities created to own and manage participation in other companies, either by maintaining ownership of shares or holding other assets. Holding companies, instead of carrying out their own business activities, simply exercise control and management of the companies in which they have a shareholding, benefiting from the income generated by these companies.

Opening a holding company in Luxembourg is very common and there are a large number of such companies in Luxembourg as they offer many advantages to their owners. The following are some of the main uses and advantages of holding companies in Luxembourg:&nbsp;

Uses and advantages of holding companies in Luxembourg

Tax optimization

Holding companies in Luxembourg can have multiple tax advantages such as tax exemption on dividends and capital gains derived from their participation in subsidiary companies if they meet certain requirements.

Control and management

Holding companies allow the ownership of several subsidiaries to be concentrated in a single entity. This facilitates the supervision and control of strategic decisions, asset management and the implementation of unified corporate policies throughout the business group.

In addition, this type of company usually does not need its own premises and as it does not carry out any commercial activities, it does not usually need an establishment permit and can therefore resort to domiciliation.

Asset protection

Holding companies make it possible to isolate strategic or valuable assets such as property, patents or intellectual property rights from the operational risk faced by subsidiary companies.

Succession planning

Holding companies provide an efficient way to structure the transfer of assets from one generation to the next and to minimize inheritance taxes. In cases of family ownership, holding companies allow the founders to retain control over the assets even when they transfer part of the ownership to successors or heirs. These types of companies are therefore frequently used by high-net-worth families to organize their wealth and plan for succession.

Legal framework for holding companies in Luxembourg

Let us now take a look at the legal framework by examining the legal forms available for holding companies in Luxembourg and the requirements for opening such a company.

Available legal forms

A holding company can have one of the following legal forms to operate in Luxembourg:

A Soparfi is not a separate legal form but an investment vehicle that can take any of the above legal forms. What makes these companies Soparfi special is the fact that they adopt the activity of a financial holding company as their main purpose and that they qualify for the tax regime applicable to holding companies in Luxembourg.

NOTE:

Requirements

As we have seen a holding company in Luxembourg can take different legal forms, so the requirements for establishing such a company vary according to the type of legal form adopted. However, some requirements are common to all of them:

In addition, depending on the type of company, there are specific requirements regarding the minimum capital, the number of associates and the governance of the company. The following table provides a summary of the requirements for the different types of legal structures that holding companies can have.&nbsp;

In addition, it is also important to take into account the requirements for the company to benefit from the Soparfi regime:

1. Main purpose of holding and management of participations.

Soparfi is defined as any company whose main purpose is the acquisition of shares in other Luxembourg or foreign companies and the management of such shares. This means that the company's activities must be oriented towards holding shares and participation in other entities without actively engaging in regular business activities.

2. Limitation on commercial activities

The holding of participations must be the main activity of a Soparfi, however, this type of company can exercise a commercial activity but only for the provision of services to its subsidiaries. If the commercial activity goes beyond this, the company will have to comply with the legislation on the exercise of commercial activity, that is, to have its own premises and establishment authorization, which will cause it to lose its special tax status.

3. Participation in subsidiaries

For a company to be considered a Soparfi and have the tax advantages of the participation regime, the company must meet the following criteria:

4. Taxation of subsidiaries

Subsidiary companies must be companies with fully taxable Luxembourg capital, or companies with non-Luxembourg capital fully taxable at a rate corresponding to corporate income tax or companies resident in a member state of the European Union.

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Process to set up a holding company in Luxembourg

Let's see now how to open a holding company in Luxembourg. Registering a company in Luxembourg, holding or not, requires multiple steps and can take some time so it is important to plan and above all to have a good understanding of the process.&nbsp;

1️⃣ Choosing the legal structure

Before starting the formalities, it is essential to choose the most suitable type of company for the business. In the previous sections, we mentioned some of the most common types of companies for holding purposes.&nbsp;

2️⃣ Reserving the company name

Before creating a holding company, it is necessary to check that the business name or is available. This is done by applying for a <a href="https://www.lbr.lu/mjrcs/jsp/IndexActionNotSecured.action?time=1729860361307&amp;loop=1">certificate of name availability</a> electronically with the Luxembourg Business Registers (LBR).

3️⃣ Opening a Bank Account

In the case of companies such as SARL or SA, a bank account must be opened in the name of the company being formed to deposit the minimum share capital required. Once the capital has been deposited, the bank issues a certificate to be used for the official registration of the company.

4️⃣ Drafting the Articles of Incorporation

The company's bylaws are the documents that define the internal functioning of the company, the rights and obligations of the partners, and the management structure. For some structures, the bylaws must be formalized before a notary. The bylaws must include:

5️⃣ Sign the bylaws before a notary (if applicable).

If the legal structure requires a notarial formalization as is the case of a SARL or SA, the founding partners must go to a notary to sign the company's bylaws.

It is also important to note that if the holding company does not engage in any activity other than holding shares, it will not need an establishment permit nor will it have to register for VAT purposes. However, if it conducts business operations, including with its subsidiaries or affiliates, it will be obliged to register for VAT purposes and apply for an establishment permit for the services it provides.

Taxation

Taxes that holding companies in Luxembourg are subject to are the same as for other companies: corporate income tax, municipal business tax and net wealth tax.&nbsp;<b>&nbsp;</b>

Corporate income tax

The corporate income tax rate in Luxembourg depends on the taxable income according to the following schedule:&nbsp;

In addition, all legal entities based in Luxembourg must contribute to the employment fund, so this rate must be increased by 7% in favor of this fund. This increases the normal tax rate from 17% to 18.19%.

Municipal business tax

Another tax that must be paid by holding companies in Luxembourg is the municipal business tax or MBT. The value of this tax depends on the municipality, in the municipality of Luxembourg it amounts to 6.75%. However, a tax allowance of 17,500 euros on taxable profits must be taken into account.

Net wealth tax

Finally, a third tax to be paid by holding companies in Luxembourg is the net wealth tax, which is levied on the net wealth of the company and its rate is as follows:

However, if the company meets the requirements to benefit from the Soparfi regime, it has several tax advantages:

Luxembourg offers a favorable tax environment, a robust legal framework, and an extensive network of tax treaties. Holding companies benefit from tax exemptions on dividends and capital gains (via the Participation Exemption), as well as no withholding tax on certain payments. Additionally, Luxembourg’s location in the EU and its stability make it a strategic choice for managing international investments.

A Soparfi (Société de Participations Financières) is a flexible holding structure used for financial investments and asset management. Unlike special holding regimes in other jurisdictions, Soparfi is a standard commercial company that can conduct limited commercial activities, if desired. While it enjoys certain tax benefits, such as the Participation Exemption, it operates under the general corporate tax system, making it distinct from pure holding vehicles that are tax-exempt.

The Participation Exemption in Luxembourg allows holding companies to receive dividends and capital gains from their subsidiaries tax-free, provided certain conditions are met. These include holding at least 10% or a minimum investment of €1.2 million in the subsidiary for at least 12 months, making it an effective tool for tax-efficient income flow within international groups.

Guide to Opening a Holding Company in Luxembourg: benefits, Soparfi, participation.

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Qu'est-ce qu'une société holding ?

Les holdings sont des entités juridiques créées pour détenir et gérer des participations dans d'autres sociétés, soit en conservant la propriété d'actions, soit en détenant d'autres actifs. Au lieu d'exercer leurs propres activités commerciales, les holdings se contentent de contrôler et de gérer les sociétés dans lesquelles elles détiennent une participation, en bénéficiant des revenus générés par ces sociétés.

L'ouverture d'une société holding au Luxembourg est très commun et il existe un grand nombre de sociétés de ce type au Luxembourg, car elles offrent de nombreux avantages à leurs propriétaires. Voici quelques-uns des principaux usages et avantages des holdings au Luxembourg :&nbsp;

Utilisations et avantages des holdings au Luxembourg

Optimisation fiscale

Les holdings luxembourgeoises peuvent bénéficier de multiples avantages fiscaux tels que l'exonération d'impôt sur les dividendes et les plus-values provenant de leur participation dans des filiales si elles remplissent certaines conditions.

Contrôle et gestion

Les sociétés holding permettent de concentrer la propriété de plusieurs filiales en une seule entité. Cela facilite la supervision et le contrôle des décisions stratégiques, la gestion des actifs et la mise en œuvre de politiques d'entreprise unifiées dans l'ensemble du groupe d'entreprises.

En outre, ce type de société n'a généralement pas besoin de locaux propres et, comme elle n'exerce pas d'activités commerciales, elle n'a généralement pas besoin d'autorisation d'établissement et peut donc recourir à la domiciliation.

Protection des actifs

Les holdings permettent d'isoler les actifs stratégiques ou de valeur, tels que les biens immobiliers, les brevets ou les droits de propriété intellectuelle, du risque opérationnel auquel sont confrontées les filiales.

Planification de la succession

Les holdings constituent un moyen efficace de structurer le transfert d'actifs d'une génération à l'autre et de minimiser les droits de succession. Dans les cas de propriété familiale, les sociétés holding permettent aux fondateurs de conserver le contrôle des actifs même lorsqu'ils transfèrent une partie de la propriété à leurs successeurs ou héritiers. Ces types de sociétés sont donc fréquemment utilisés par les familles fortunées pour organiser leur patrimoine et planifier leur succession.

Cadre juridique des sociétés holding au Luxembourg

Voyons maintenant le cadre juridique des holdings en examinant les formes juridiques disponibles au Luxembourg et les conditions d'ouverture d'une telle société.

Formes juridiques disponibles

Une société holding peut avoir l'une des formes juridiques suivantes pour opérer au Luxembourg :

Une Soparfi n'est pas une forme juridique distincte mais un véhicule d'investissement qui peut prendre n'importe laquelle des formes juridiques susmentionnées. Ce qui fait de ces sociétés des Soparfi spéciales, c'est le fait qu'elles adoptent l'activité de holding financier comme objet principal et qu'elles bénéficient du régime fiscal applicable aux holdings au Luxembourg.

Exigences

Comme nous l'avons vu, une société holding au Luxembourg peut revêtir différentes formes juridiques, de sorte que les exigences relatives à la création d'une telle société varient en fonction du type de forme juridique adopté. Toutefois, certaines exigences sont communes à toutes ces formes :

En outre, selon le type de société, il existe des exigences spécifiques concernant le capital minimum, le nombre d'associés et la gouvernance de la société. Le tableau suivant résume les exigences relatives aux différents types de structures juridiques que peuvent avoir les sociétés holding:<b>&nbsp;</b>

En outre, il est également important de tenir compte des conditions requises pour que la société puisse bénéficier du régime de la Soparfi :

1. Objet principal de la détention et de la gestion des participations

La Soparfi est définie comme toute société dont l'objet principal est l'acquisition de participations dans d'autres sociétés luxembourgeoises ou étrangères et la gestion de ces participations. Cela signifie que les activités de la société doivent être orientées vers la détention d'actions et de participations dans d'autres entités sans s'engager activement dans des activités commerciales régulières.

2. Limitation des activités commerciales

La détention de participations doit être l'activité principale d'une Soparfi. Toutefois, ce type de société peut exercer une activité commerciale, mais uniquement pour la fourniture de services à ses filiales. Si l'activité commerciale va au-delà, la société devra se conformer à la législation sur l'exercice de l'activité commerciale, c'est-à-dire disposer de ses propres locaux et d'une autorisation d'établissement, ce qui lui fera perdre son statut fiscal particulier.

3. Participation à des filiales

Pour qu'une société soit considérée comme une Soparfi et bénéficie des avantages fiscaux du régime de participation, elle doit répondre aux critères suivants :

Les filiales doivent être des sociétés à capital entièrement imposable au Luxembourg, ou des sociétés à capital non luxembourgeois entièrement imposables à un taux correspondant à l'impôt sur les sociétés, ou des sociétés résidentes d'un État membre de l'Union européenne.

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Processus de création d'une société holding au Luxembourg

Voyons maintenant comment créer une société holding au Luxembourg. L'enregistrement d'une société au Luxembourg, qu'il s'agisse d'une holding ou non, nécessite de multiples démarches et peut prendre un certain temps. Il est donc important de planifier et surtout de bien comprendre le processus.

1️⃣ Choix de la structure juridique

Avant de commencer les formalités, il est essentiel de choisir le type de société le mieux adapté à l'entreprise. Dans les sections précédentes, nous avons mentionné certains des types de sociétés les plus courants à des fins de détention.

2️⃣ Réserver le nom de la société

Avant de créer une société holding, il est nécessaire de vérifier que le nom commercial est disponible. Pour ce faire, il convient de demander un&nbsp;<a href="https://www.lbr.lu/mjrcs/jsp/IndexActionNotSecured.action?time=1729860361307&amp;loop=1">certificat de disponibilité du nom</a> par voie électronique auprès du Registre de commerce luxembourgeois (RCL).

3️⃣ Ouverture d'un compte bancaire

Dans le cas des sociétés de type SARL ou SA, un compte bancaire doit être ouvert au nom de la société en cours de constitution pour y déposer le capital social minimum requis. Une fois le capital déposé, la banque délivre un certificat à utiliser pour l'enregistrement officiel de la société.

4️⃣ Rédaction des statuts de la société

Les statuts de la société sont les documents qui définissent le fonctionnement interne de la société, les droits et obligations des associés et la structure de gestion. Pour certaines structures, les statuts doivent être formalisés devant un notaire. Les statuts doivent comprendre :

Si la structure juridique nécessite une formalisation notariale, comme dans le cas d'une SARL ou d'une SA, les associés fondateurs doivent se rendre chez un notaire pour signer les statuts de la société.

Il est également important de noter que si la société holding n'exerce aucune autre activité que la détention d'actions, elle n'aura pas besoin d'autorisation d'établissement et ne devra pas s'immatriculer à la TVA. En revanche, si elle effectue des opérations commerciales, y compris avec ses filiales ou sociétés affiliées, elle sera tenue de s'enregistrer aux fins de la TVA et de demander une autorisation d'établissement pour les services qu'elle fournit.

La fiscalité

Les impôts auxquels sont soumises les sociétés holding au Luxembourg sont les mêmes que pour les autres sociétés: l'impôt sur le revenu des sociétés, l'impôt commercial communal et l'impôt sur la fortune nette.

Impôt sur le revenu des sociétés

Le taux de l'impôt sur le revenu des sociétés au Luxembourg dépend du revenu imposable selon le barème suivant :

En outre, toutes les personnes morales établies au Luxembourg doivent contribuer au fonds pour l'emploi, de sorte que ce taux doit être majoré de 7 % en faveur de ce fonds. Le taux d'imposition normal passe ainsi de 17 % à 18,19 %.

Impôt commercial communal

Un autre impôt qui doit être payé par les sociétés holding au Luxembourg est la taxe professionnelle communale ou MBT. La valeur de cette taxe dépend de la commune. Dans la commune de Luxembourg, elle s'élève à 6,75 %. Toutefois, il faut tenir compte d'un abattement fiscal de 17.500 euros sur les bénéfices imposables.

Impôt sur la fortune

Enfin, un troisième impôt à payer par les sociétés holding au Luxembourg est l'impôt sur la fortune nette, qui est prélevé sur la fortune nette de la société et dont le taux est le suivant :

Toutefois, si la société remplit les conditions pour bénéficier du régime de la Soparfi, elle bénéficie de plusieurs avantages fiscaux :

Guide pour l'ouverture d'une société holding au Luxembourg : avantages, Soparfi, structure.

Ouverture d'une société holding au Luxembourg en 2025

Opening a holding company in Luxembourg in 2025

Companies in Luxembourg as in all countries are subject to taxes, the three main taxes being corporate income tax, municipal income tax and net wealth tax. In addition, although not all, many companies must register for VAT. In this article, we will then take a detailed look at corporate tax in Luxembourg and the registration process to declare TVA.

Landscape of corporate tax in Luxembourg in 2025

The three main taxes payable by companies in Luxembourg are the corporate income tax, the municipal income tax and the net wealth tax. We will see them in detail, but first we will look at the legal texts and entities involved in the subject of corporate taxes in Luxembourg.

Main tax regulations

There are different regulations governing corporate taxation in Luxembourg, these are the main ones:&nbsp;

Bodies involved in corporate taxation in Luxembourg

As for the bodies involved, the main one is the Luxembourg Inland Revenue (ACD), although there are others, let's take a look at them:

Corporate income tax in Luxembourg

The main tax payable by companies in Luxembourg is the corporate income tax, this tax is a direct tax levied on profits earned by companies in Luxembourg and applies to both resident and non-resident companies. A company is considered as resident when it has its registered office or its effective place of management in Luxembourg and is considered as non-resident when its registered office is not in Luxembourg but the company generates income from Luxembourg sources.

Although both companies are subject to tax in Luxembourg, the taxable base is different in each case:

As for the corporate tax rate in Luxembourg, it depends on the taxable income according to the following schedule:&nbsp;

Another tax payable by companies in Luxembourg is the Municipal Business Tax (MBT). The rate of this tax depends on the municipality where the business operates. In the City of Luxembourg, the MBT rate is 6.75% in 2025.

However, there is a tax allowance of 17,500 euros but this applies only to sole proprietors and partnerships. The allowance is automatic and is not subject to specific conditions or formalities.

Finally, a third tax payable by companies in Luxembourg is the net wealth tax, this tax is levied on the net assets of the company and its rate is as follows:

Recent changes in the law

As for recent changes, it is worth mentioning a change that although it cannot be considered as recent as it has not yet taken place, it will take place very soon.&nbsp;

To the delight of many, this change involves a reduction in taxation for companies, as of January 1, 2025, the corporate income tax (IRC) rate will be reduced by one percentage point. The rate will then drop from 17% to 16% for companies with taxable income over 200,000 euros and from 15% to 14% for entrepreneurs and small companies with taxable income up to 175,000 euros. 

How to register for VAT

Any natural or legal person established in Luxembourg who independently and regularly carries out economic activities subject to VAT within the territory of Luxembourg must register for VAT purposes. Persons or entities that are not established or domiciled in Luxembourg are not required to register for Luxembourg VAT unless they carry out transactions whose place of taxation is deemed to be located in Luxembourg under the VAT territoriality rules. In addition, taxable persons whose annual turnover excluding tax during a calendar year does not exceed 50,000 euros are exempt from VAT.  &nbsp;

Let's see then how to register for the collection of the TVA in Luxembourg. The process is quite simple and consists of 3 easy steps:

1. Collect the necessary information

To register as a TVA collector, it is necessary to file an initial declaration or an option declaration. The first step is then to collect all the necessary elements to complete these forms. The following information is required to complete this initial declaration:

2. Submit the corresponding declaration to the competent tax office.

Once you have all the data at hand, it is necessary to fill out the corresponding forms and submit them to the competent tax office. The form to be completed will depend on whether you are registering for VAT on a mandatory or voluntary basis and on whether the applicant makes intra-community acquisitions (AIC) of more than 10,000 euros per year:

These forms can be submitted either online via <a href="https://guichet.public.lu/fr/citoyens/myguichet.html">MyGuichet.lu</a>, the government’s secure digital platform, or by mail to the Registration Duties, Estates and VAT Authority (AED).&nbsp;

🔹 Address: 308 Rte d'Esch, Cessange Luxembourg
🔹 Phone: (+352) 24 78 06 24
🔹 Mail: info@aed.public.lu
🔹 Website: pfi.public.lu
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3. Receive the VAT Registration Number

Once the submission is processed and approved, the business or individual will be issued a Luxembourg VAT number. This number consists of eight digits, preceded by the country code "LU." The VAT number is essential for all VAT-related transactions, such as invoicing and filing VAT returns.

At this point, it is possible to have a general idea of the main taxes to which companies are subject in Luxembourg, however, taxation is one of the most complex issues that companies have to face and the particularities of each one can affect their tax obligations. There are many aspects that deal with more specific topics that have not been dealt with here, such as the taxation of dividends, taxation in the regime of parent companies and subsidiaries, or the many existing tax allowances. It is normal to get lost in or have doubts about it, if that is your case and you would like some help, EasyBiz is here to help you, do not hesitate to contact us.

Luxembourg’s combined corporate tax rate, which includes the corporate income tax (CIT) and municipal business tax (MBT), is around 24.94% in 2024. This rate is competitive compared to other European countries, as it is lower than countries like Germany or France but higher than some low-tax jurisdictions such as Estonia or Hungary. Additionally, Luxembourg's extensive tax treaties and incentives make it particularly attractive for multinational corporations.

For corporations, capital gains are generally taxed at the same rate as regular corporate income, meaning the combined rate of approximately 24.94% applies. However, capital gains on qualifying shareholdings may be exempt under the participation exemption regime, provided certain conditions are met. This exemption makes Luxembourg favorable for holding companies.

Tax treaties in Luxembourg help businesses avoid double taxation by determining which country has the right to tax certain types of income, such as dividends, interest, or royalties. They often reduce withholding tax rates and provide tax relief for cross-border transactions, making Luxembourg attractive for international corporations by ensuring more favorable tax treatment on global income streams.

Income tax rate, municipal business tax, net wealth tax, VAT and recent changes.

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