What Does It Cost to Run a Luxembourg Company?
Setting up a company is only part of the cost. Here is what a Luxembourg company pays and files each year, using the 2026 rates.
Corporate income tax
Corporate income tax (CIT) is 16% in 2026. A reduced rate of 14% applies to the first €175,000 of taxable income, with a transitional band up to €200,000. A 7% solidarity surcharge applies on top of CIT.
Municipal business tax
Municipal business tax depends on where the company has its registered seat. In Luxembourg City it is 6.75%. Including the surcharge, the combined rate on profits above €200,000 in Luxembourg City is 23.87%.
Net wealth tax
Luxembourg is one of the few countries that taxes company net assets. The standard rate is 0.5%, with a lower rate of 0.05% on net assets above €500 million. Qualifying participations are generally left out of the base, so holding companies often pay little more than the minimum. A minimum net wealth tax applies even if the company makes no profit, at €535, €1,605 or €4,815 depending on the balance sheet total.
VAT
The standard VAT rate in Luxembourg is 17%, one of the lowest in the European Union. Whether you need to register depends on your activity.
Withholding tax
Dividends paid by a Luxembourg company are subject to 15% withholding tax by default, although exemptions and treaty rates often apply. Arm’s length interest and royalties are generally paid without withholding tax.
Ongoing compliance
Every Luxembourg company must keep accounting records, file annual accounts, submit corporate income tax, municipal business tax and net wealth tax returns, and keep the shareholder register and the beneficial owner register (RBE) up to date. If you pay staff or use a registered address, you will also have payroll and domiciliation costs.
Professional costs
Accounting, domiciliation and corporate services are typically the largest recurring cost for a company without staff. We arrange these around your requirements, so you only pay for what you need.
A rate cut may be coming
The 2027 budget bill proposes lowering the CIT rate by one percentage point from 2027, which would bring the combined rate in Luxembourg City to 22.80%. This is a proposal until it passes.
Contact us for a clear, no-obligation view of what your Luxembourg company will cost.