Luxembourg
Western Europe • UTC+2 • Europe/LuxembourgLuxembourg Personal Income Tax
Luxembourg's tax system is progressive, with rates ranging from 8% to 42%. The system includes personal income tax, corporate tax, and VAT.
Income Tax
8%–42%
Progressive rates
Corporate Tax
24.94%
Standard corporate tax rate
VAT / GST
16%
Standard VAT rate
Nomad Visa
Not Available
No dedicated program
Tax System Overview
Luxembourg's tax system is characterized by progressive personal income tax rates, a competitive corporate tax environment, and a standard VAT rate.
System Type
Progressive personal income tax
Resident Taxation
Residents are taxed on their worldwide income.
Non-Resident Taxation
Non-residents are taxed only on Luxembourg-source income.
Tax Year
January 1 – December 31
Income Tax Bands
Luxembourg's progressive income tax bands based on annual taxable income in EUR (2025).
Tax Treaty
Double Taxation Agreements help avoid double taxation on income earned in multiple countries.
Germany
Treaty ActiveThe treaty between Luxembourg and Germany prevents double taxation on income, reduces withholding taxes, and clarifies residency rules.
Key Benefits
Prevents double taxation on income earned in both countries.- Reduced withholding tax on dividends, interest, and royalties.
- Clarifies tax residency to determine where taxes should be paid.
Totalization Agreement
These agreements coordinate social security systems, ensuring workers pay into only one system at a time.
Belgium
Agreement ActiveLuxembourg and Belgium have a social security totalization agreement that prevents workers from paying social security in both countries simultaneously.
Coverage Areas
Facts
- Prevents double taxation of social security contributions for cross-border workers.
- Allows workers to combine contribution periods from both countries.
Other Countries with Agreements
Business & Freelancing
Corporate Tax Rate
24.94% including municipal business tax
VAT Registration
Mandatory if annual turnover exceeds €35,000.
Freelancer Rules
Freelancers must register for VAT if turnover exceeds €35,000 and are subject to personal income tax.
Crypto Policy
Cryptocurrency gains are taxed as miscellaneous income.
Frequently Asked Questions
Digital Nomad & Benefits
Visa Details
Tax Perks
- No wealth tax on personal assets
- Exemption on certain capital gains
Filing Roadmap
Register for Tax Identification
Obtain a tax identification number from the Luxembourg tax authorities.
Gather Income Documentation
Collect all relevant income documents, including employment and investment income.
Complete Tax Return
Fill out the tax return form, including all income and deductions.
Submit Tax Return
Submit the completed tax return to the Luxembourg tax authorities by the deadline.
Pay Any Tax Due
Ensure any taxes owed are paid by the deadline to avoid penalties.