Tax revenue in Luxembourg (officially the Grand Duchy of Luxembourg) was 38.65% of GDP in 2017, which is just above the average OECD in 2017 (34.19% of GDP).

The most important revenue sources for the government are:

• Corporate income tax
• Local business tax
• Net wealth tax
• Personal income tax
• Value added tax

Taxes are administrated by government agencies. The Minister of Finance levies the taxes through the director of Taxation, the revenue offices, and the tax collection offices.

There are two possibilities: either the company is a resident or non-resident.

Resident companies: Luxembourg considers a company to be resident if its management headquarter is in the Grand Duchy. Luxembourg resident companies have to pay taxes on their worldwide income once foreign taxes (where the company is present and earns an income) are deducted.

Non-resident companies: Luxembourg considers a company to be non-resident if its principle place of management is located outside the country.

The only companies that are tax-free are:

• Companies with charitable purposes or which work for the general interest
• Private-wealth management companies
• Undertakings for collective investment

This article needs to be updated. (June 2021)

In addition to this, there is a solidarity surtax and a municipality business tax on income.

Resident individuals:

Luxembourg considers individuals as tax resident if they have their permanent residence (where they are physically present for an uninterrupted period of more than six months) in Luxembourg. Therefore, owning a residence in Luxembourg is not the only condition for tax residence.

People that are resident in Luxembourg are taxed on their worldwide income as though it were earned in Luxembourg. Non-resident individuals are only taxed on their Luxembourg-source income, while part-year residents are taxed at a percentage equivalent to what they would be taxed at if all of their income is earned in Luxembourg. It is possible for non-residents to elect to be treated as though their income is fully from Luxembourg if at least 90% of all income is derived from Luxembourg sources (50% for Belgian-resident individuals).

In Luxembourg, social security contributions are payable by employers and employees. They are divided into five types of fund:

• Health insurance
• Old-age pension insurance
• Long-term care insurance
• Accident insurance
• Employers’ mutual insurance fund

There are different rates that are applicable depending on the type of fund and the employment status. In 2024, the rates are as follows:

• Economy of Luxembourg
• Social welfare in Luxembourg
• Economy of Europe