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Generic Tax Name Corporate income tax - Trade tax
Tax name in the national language Impôt commercial communal
Tax name in English Trade tax
Member State LU-Luxembourg
Tax in force since 1936/12/01
If abolished, date on which the tax ceases to apply
Business version date 2011/01/01
Version date 2011/08/19
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Law on trade tax of 1 December 1936 as amended by Provisions of 31 March 1943, 16 November 1943 on the levying of trade tax in simplified form; and amended by the Laws of 22 November 1973 (Mémorial A, 1973, p. 1545-1546), 1 July 1981 (Mémorial A, 1981, p. 989), 31 July 1982 (Mémorial A, 1982, p. 1474), 14 June 1984 (Mémorial A, 1984, p. 1073), 22 February 1986 (Mémorial A, 1986, p. 824), 19 December 1986 (Mémorial A, 1986, p. 2330), 6 December 1990 (Mémorial A, 1990, p. 1013), 24 December 1996 (Mémorial A, 1996, p. 2911); 12 February 1999 (Mémorial A, 1999, p. 190); 21 June 1999 (Mémorial A, 1999, p. 1892); 15 June 2004 (Mémorial A, 2004, p. 1568) and various Grand Ducal and Ministerial Regulations.

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

 
Geographical Scope Grand Duchy of Luxembourg.
 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments
 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Comments

Income.

Trading profits, with certain increases and certain deductions (the percentage of profits received from partnerships (sociétés de personnes) liable to trade tax).

 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit

Comments

Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 

Comments


Comments

Deductions:

An allowance of EUR 40,000 is granted on profits made by natural persons and partnerships (sociétés de personnes) and of EUR 17,500 on profits made by companies limited by shares (sociétés de capitaux).

Exemptions:

As a general rule, those persons or companies are exempted which are also exempted from corporation tax.

 
Rate(s) Structure
Nominal corporate income tax rate Rate: 3.00 %

Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate: 200.00 %
Combined rate (all-in rate) Rate: 6.75 %


Comments

The national corporate income tax rate is multiplied by the local government surcharge (fixed between 200% - 400%).


Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate:
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate:


Comments
 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received
Outgoing dividends withholding tax
Outgoing interest payments withholding tax
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company
CFC-rules apply if foreign tax rate is lower than
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

Comments   Non-treaty countries
 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio:
Definition numerator
Definition denominator
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

Tax is payable annually on the basis of tax returns within one month after receipt of the tax assessment notice.

Tax is paid in quarterly instalments in advance. The advance payments are deductible against final tax liability. Any overpayment of tax is refunded.

 
Tax collector

Administration of direct taxes (Administration des contributions directes).

 
Special features

Non-residents:

The same as for residents, since the tax is levied on the enterprise by virtue of the fact that it is located in Luxembourg, regardless of who the owner is.

Losses:

Without limit for losses incurred in 1991 and thereafter.

 
Economic function







Comments

 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51o (d51bc)

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2009 588.00 EUR 1.62
2008 576.20 EUR 1.53
2007 465.00 EUR 1.26
2006 480.30 EUR 1.44
2005 460.20 EUR 1.55
2004 458.60 EUR 1.66
2003 547.70 EUR 2.12
2002 534.90 EUR 2.16
2001 469.70 EUR 2.00
2000 459.90 EUR 1.98

Comments