Paying Taxes in Luxembourg

 1. What is the corporate tax in Luxembourg?

In Luxembourg, the corporate tax rate varies according to the income and a 5% increase is applied as an unemployment fund contribution. Therefore, a company with an income below 15,000 EUR is subject for 21% corporate tax, while a company with an income that exceeds 15,000 EUR has to pay a 22,05% corporate tax. Usually, the Municipal Business Tax of 6,75% is also added to the income tax rate.

2. What is the VAT in Luxembourg?

In Luxembourg, the standard VAT rate is 15%, but there are some exceptions.  A company with activity in management and safekeeping of securities is subject to a 12% VAT rate, while a 6% VAT rate applies for gas and electricity and only 3% for food products, books, newspapers, hotels and radio and TV broadcasting services.

3. How can the VAT be refunded in Luxembourg?

If the company’s annual turnover  is between 112,000 EUR and 620,000 EUR, a quarterly declaration must be filed in for VAT refund and if the annual turnover exceeds 620,000 EUR, the procedure should be performed monthly in order to get VAT refund. Even if these conditions are not met, any company must file a declaration every year for VAT return.

4. What is the dividend tax in Luxembourg?

The dividend tax rate is 15% of gross dividends in Luxembourg.

5. Are there any incentives for foreign investors in Luxembourg?

Luxembourg offers many incentives for foreign investors, consisting of credit assistance or tax rebates. The government also developed programs to encourage foreign investment, in addition to investment tax credits, venture capital investment certificates, regional and national incentives and environmental incentives.

6. Why do I need a local accountant for my business in Luxembourg?

For a company that is set up in Luxembourg, a local accountant will have easier access to local market knowledge and will be able to guide the company on a free-of-risks path. 

BridgeWest offers company formation in Luxembourg, including virtual office and other related services.