Three direct taxes and VAT shape a Luxembourg company's tax burden. Here are the up-to-date 2025 rates and how they fit together.
Luxembourg corporate taxation rests on three direct taxes — corporate income tax (CIT/IRC), municipal business tax (MBT/ICC) and net wealth tax (NWT) — plus VAT on day-to-day operations. Understanding how they interact is key to managing the tax burden of a SOPARFI or an operating company.
Corporate income tax (CIT / IRC)
CIT applies to the taxable profit of capital companies. From tax year 2025, the rate is reduced from 17% to 16% for income above €200,000 (and from 15% to 14% up to €175,000). A 7% solidarity surcharge applies on the CIT amount.
Municipal business tax (MBT / ICC)
MBT is a municipal tax on operating profit. In Luxembourg City it is 6.75%. Combined with CIT and the surcharge, it brings the aggregate rate to approximately 23.87% (down from 24.94%).
Applicable rates — Luxembourg City, tax year 2025
Indicative figures for tax year 2025. MBT rates differ by municipality; your position is confirmed on a case-by-case basis.
Net wealth tax (NWT)
Net wealth tax is levied at 0.5% on the unitary value of net assets. A minimum net wealth tax applies ; since 2025 it follows three brackets — €535, €1,605 and €4,815 — based on total balance sheet size.
Luxembourg VAT
The standard VAT rate is 17%, the lowest in the EU, with reduced rates of 14%, 8% and 3%. Any company carrying out a taxable activity must register and file periodic returns.
Withholding tax and participations
Dividends bear a 15% withholding tax, reducible to zero under the parent-subsidiary regime or a treaty. Details are in our article on the SOPARFI.
Returns and compliance
CIT, MBT and NWT returns are filed electronically, based on the annual accounts in eCDF format. Explore our tax services.