TAX REVENUE
Luxembourg’s financial sector continues to play a pivotal role in sustaining the country’s public finances, contributing EUR 7.2bn in tax revenue in 2024 [9]. This marked a substantial rise from EUR 3.4bn in 2014, reflecting an average annual growth rate of 7.8% over the past decade.
Corporate Income Tax (CIT) represents the largest portion of this revenue, accounting for nearly 32%. Combined with the Withholding Tax on Salaries (RTS), these two categories made up slightly over 56% of the total tax revenue generated by the financial sector in 2024.
The steady growth of subscription tax (TABO) revenues over the past decade reflects the sustained expansion of assets under management (AUM) in Luxembourg-domiciled investment funds.
A compound annual growth rate (CAGR) of 5.3% over this period highlights Luxembourg’s continued appeal as a global fund hub, despite short-term market fluctuations or external shocks.
Within the sector, financial holding companies and banking are the primary contributors to tax revenue (excluding TABO [10]). Meanwhile, investment fund management and professional services – although representing a smaller overall share – have increased their contributions over the past decade.
Specifically, the share of tax revenue from investment fund management rose from 11.7% in 2014 to 17.3% in 2024, while that of professional services increased from 6.9% to 9.4% over the same period.
The critical importance of the financial sector is also evident when examining individual taxes. The sector accounts for nearly 64% of all Corporate Income Tax (IRC) collected across the entire economy and shows a similarly dominant share in the case of the Municipal Business Tax (ICC).
Its significance is even more pronounced in relation to the Wealth Tax, with 80% of the total revenues originating from financial sector entities. Furthermore, the sector is responsible for about a quarter of the total amount collected through Withholding Tax on Salaries.
[9] Taxes in scope include Corporate Income Tax (IRC), Municipal Business Tax (ICC), Withholding Tax on Salaries (RTS), Wealth Tax (IF) and Subscription Tax (TABO). Please note that Value Added Tax (VAT) and Income Tax on Directors' Fees (IT) – which together amounted to an additional EUR 1,485.2 mn in 2024 – are excluded from the scope of this report.
[10] The Subscription Tax (TABO) is excluded from this analysis, as attributing it solely to investment fund management would overstate their contribution at the expense of other sectors such as banking and financial holding companies.