ACD Income Tax Brackets in Luxembourg for 2024

A AAA-rated economy that provides an ideal gateway to Europe, Luxembourg is a highly developed country. With multiple incentives, outstanding digital infrastructure, and a skilled multilingual workforce, Luxembourg provides a highly pro-business environment and a favorable tax system. 

What is income tax? Income tax refers to payments that individuals or companies are required to make to the government based on earnings derived from various sources. These earnings or income may include employment wages, pensions and investments. The tax system in Luxembourg is administered by the official tax body, the Administration des Contributions Directes.

The Income Tax Law provides guidance and support in the form of income tax tables for individuals and businesses. Taxpayers must familiarize themselves with these tax tables and the corresponding income tax brackets and income tax rates, for effective tax planning and to remain compliant with the tax laws of Luxembourg.

Here you will learn more about:

• headline tax rates
• personal income tax (PIT) rates
• corporate income tax (CIT) rates
• capital gains tax (CGT) rates
• withholding tax rates for residents and non-residents
• value-added tax (VAT) rates

Headline Tax Rates in Luxembourg

Personal Income Tax (PIT) Brackets for Individuals in Luxembourg for 2024

Individual income tax rates are levied progressively in Luxembourg: the more income you earn, the more you are taxed. Income tax is deducted directly at source; as an employee, you would receive a net salary after deductions for social security contributions and your estimated income tax. Withholding tax forms are sent to the taxpayer each year and these must be forwarded to the employer for calculation of withholding tax. Individual residents pay tax on worldwide income.

The effective tax rates are captured below.

Taxpayers are subject to a solidarity tax of 7%. However, the solidarity tax is increased to 9% if a taxpayer earns more than EUR 150,000 in tax class 1 and 1a or more than EUR 300,000 in tax class 2.

Detailed 2024 tax scales as they apply to each tax class are published in the Official Newspaper of the Grand Duchy of Luxembourg.

Personal Income Tax Due Dates

Corporate Income Tax (CIT) Rates in Luxembourg for 2024

In Luxembourg, the effective Corporate Income Tax (CIT) rates are composed of a base CIT, a solidarity surtax and municipal tax charged on the base CIT rate. For example, the base CIT rate for companies with a taxable income in excess of EUR 200,001 is 17%. However, the solidarity surtax of 7% and municipal tax of 6.75% lead to an effective overall tax rate of 24.94%.

Corporate Income Tax Due Dates

Capital Gains Tax (CGT) in Luxembourg

Capital Gains Tax (CGT) in Luxembourg is subject to the standard corporate income tax (CIT) rates and personal income tax (PIT) rates respectively. 

Withholding Tax Rates for Residents and Non-Residents in Luxembourg

In general, withholding tax (WHT) is levied on residents and non-residents in Luxembourg. The tax rates may vary depending on the source of income concerned, such as dividends, interest and royalties. Non-residents are not subject to WHT for interest and royalty payments.

Luxembourg is signatory to several double taxation treaties (DTTs) which again may vary WHT rates. A taxpayer may benefit from the provisions of such agreements.

Value-Added Tax Rates in Luxembourg

Value-Added Tax (VAT) rates with application examples are tabulated below: