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Company Formation Luxembourg



Taxes in Luxembourg

Updated on Friday 08th December 2017

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taxes_in_luxembourg.jpgLuxembourg has a long lasting tradition of a great business center, with high financial competence. It has a very good geographic positioning, at the heart of Europe, a strong political stability, and has a very multicultural and qualified workforce. All these key factors have established Luxembourg as being a hub for international trade in the financial sector.
Income tax in Luxembourg
Any person known to be a resident of Luxembourg has to pay taxes on his worldwide income during the tax year. In Luxembourg, the tax year starts on January 1 and ends on December 31. When it comes to married couples, spouses are taxed jointly. 
If a person is fiscally domiciled in Luxembourg or if he has been resident of Luxembourg for more than six months per year, then he can be considered a resident for tax purposes. 
Luxembourg splits the income one generates in eight categories that added together over the year generate the total taxable income. The most important are:
- commercial or business profits;
- profits generated by agriculture and forestry;
- profits derived from self-employed professionals;
- net income from employment, pensions and/or annuities, investments or rental of property;
- other net income (including capital gains).
There are cases in which withholding taxes are levied on some of the above mentioned incomes. When it comes to income generated from employment, pensions or savings and investments, they are taxed on a pay-as-you-earn system. There are incomes that must be declared in an annual tax return that must be submitted to the Luxembourg Tax Administration.
If you plan to open a company in Luxembourg and you want to know more about the taxes in Luxembourg, our company formation team  will help you with all the needed information. Our experienced personnel in setting up a company in Luxembourg can explain in detail the taxation system in Luxembourg. 
Corporate income tax in Luxembourg
The corporate income tax in Luxembourg is calculated on the profit specified in the commercial balance sheet. The income is derived from a commercial activity, such as self-employment or partnership in one of the types of companies available in Luxembourg. Partners of such companies are taxed individually based on the share they have within the partnership.
In Luxembourg, the rate of the corporate income tax is 22.47 percent and includes a 7 percent employment fund contribution. Furthermore, Luxembourg applies a rate for the city of Luxembourg worth 6.75 percent.
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