Luxembourg Tax Rates
Luxembourg is one of Europe's premier financial centers, offering a progressive income tax system with rates up to 42%, a competitive corporate tax regime at approximately 24.94% (combined), and extensive investment fund structures. The Grand Duchy's participation exemption, IP regime, and robust treaty network make it a key hub for international holding and finance companies.
Top Income Tax Rate
42%
Corporate Tax Rate
23.9%
VAT / Sales Tax
17%
Capital Gains Tax
21%
Detailed Tax Information
Income Tax Brackets
Luxembourg applies a highly granular progressive income tax with 19 brackets ranging from 0% to 42%. A surcharge for the employment fund of 7% (9% for income above €150,000) is added to the tax liability. Luxembourg uses tax classes: Class 1 (single), Class 1a (single parent or 65+), and Class 2 (married or partners filing jointly). Significant deductions are available for mortgage interest, pension contributions, and insurance premiums.
| Income Range | Tax Rate |
|---|---|
| €0 – €11K | 0% |
| €11K – €13K | 8% |
| €13K – €15K | 10% |
| €15K – €17K | 12% |
| €17K – €19K | 14% |
| €19K – €21K | 16% |
| €21K – €23K | 18% |
| €23K – €25K | 20% |
| €25K – €27K | 22% |
| €27K – €28K | 24% |
| €28K – €30K | 26% |
| €30K – €32K | 28% |
| €32K – €34K | 30% |
| €34K – €36K | 32% |
| €36K – €38K | 34% |
| €38K – €40K | 36% |
| €40K – €42K | 38% |
| €42K – €200K | 39% |
| €200K+ | 42% |
Corporate Tax
Luxembourg corporate income tax (IRC) is 17% (15% on the first €175,000). A municipal business tax (ICC) averaging 6.75% in Luxembourg City and a solidarity surcharge of 7% on the IRC bring the combined rate to approximately 24.94%. The participation exemption provides full exemption for dividends and capital gains from qualifying subsidiaries (minimum 10% or €1.2 million acquisition cost, held for 12 months).
Standard Rate
17%
Small Business Rate
15%
Capital Gains Tax
Capital gains on movable property held for less than 6 months are taxed at full progressive rates. Gains on assets held for more than 6 months benefit from the half-rate mechanism (demi-taux global), which effectively halves the tax rate. Gains on securities are taxed at the half-rate if the individual held more than 10% of the company at any time in the 5 years preceding the sale. Real property gains are subject to a quarter-rate after 2 years.
Rate
21%
VAT / Sales Tax
Luxembourg has the EU's lowest standard VAT rate at 17%, with reduced rates of 14%, 8%, and a super-reduced rate of 3%. This low VAT rate has historically attracted e-commerce businesses, though EU rules on the place of supply for digital services have reduced this advantage.
Standard Rate
17%
Cryptocurrency Tax
Cryptocurrency gains in Luxembourg are taxed based on the nature and holding period. Speculative gains (assets held less than 6 months) are taxed at progressive rates as miscellaneous income. Gains on crypto held more than 6 months may be exempt if below €500 or subject to the half-rate. Professional traders are taxed at progressive rates as business income.
Tax Treaties
Luxembourg maintains approximately 85 double taxation treaties. As a major international financial center and EU founding member, Luxembourg's treaty network is extensive and facilitates cross-border investment flows.
Treaty Network
85
Double taxation agreements
Major treaty partners:
Key Details
Relocate to Luxembourg
See how much you could save by moving here from your current country.
$-17,806
Tax in United States
$24K
24.4% effective
Tax in Luxembourg
$42K
42.2% effective
Additional Cost
73.1%
more tax annually
US Citizens: Important Note
US citizens are taxed on worldwide income regardless of residence. You'll still need to file US taxes, though the Foreign Earned Income Exclusion and Foreign Tax Credit may reduce your liability.
