CORPORATE INCOME TAX REDUCTIONS

Luxembourg has implemented targeted corporate tax reductions as part of its broader strategy to strengthen competitiveness and maintain its position as a leading international financial centre. Introduced as part of the 2024 tax package and effective from 2025, the changes reduce statutory corporate income tax rates while providing greater predictability for companies planning medium- to long-term investments.

Luxembourg’s Minister of Finance has publicly signalled the intention to further reduce corporate taxation to OECD averages, reinforcing predictability for international investors.

Luxembourg – Corporate Income Tax Overview (Luxembourg City)

Tax Component
Rate
Scope/Comment
Corporate Income Tax (CIT)
14%
Taxable income up to EUR 175,000
EUR 24,500 + 30% of income exceeding EUR 175,000
Taxable income between EUR 175,001 and EUR 200,000
16%
Taxable income above EUR 200,000
Solidarity Surtax
7% of CIT
Surcharge applied to the CIT amount
Municipal Business Tax (MBT)
6.75%
Luxembourg City rate (municipality dependent)
Aggregate Corporate Tax Rate
23.87%
Applicable in Luxembourg City for companies with taxable income above EUR 200,000

WHY IT MATTERS

  • Enhances international competitiveness when comparing European locations

  • Provides certainty for CFOs and COOs modelling multi-year operating structures

  • Supports substance build-up across functions
  • Complements targeted incentives for talent, remuneration, and digital transformation

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