Corporate income tax
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Corporate income tax (impôt sur le revenu des collectivités - IRC) is a special proportional tax levied on gains made by certain corporations (including capital companies) during the financial year.
Capital companies are fiscally opaque, i.e. as corporate entities, they are taxpayers and subject to the tax on companies called corporate income tax.
Who is concerned?
Corporate income tax applies mainly to the following legal forms of capital companies:
- single member public limited companies (SA) or public limited companies with up to 100 partners;
- simplified shareholder companies (société par action simplifiée - SAS);
- partnerships limited by shares (société en commandite par actions - SECA or SCA) with at least 2 partners, one limited partner and one general partner;
- single member limited liability companies (société à responsabilité limitée - SARL) or limited liability companies with several partners;
- simplified limited liability companies (société à responsabilité limitée simplifiée);
- single member European companies (société européenne - SE) or European companies with several partners.
Other types of corporate entity can file their tax return by either following the administrative procedure or by using the template in PDF format. The types of corporate entity concerned are the following:
- cooperative companies (société coopérative);
- commercial companies with special legal status under Luxembourg law;
- foreign law SAs;
- foreign law SECAs;
- foreign law SARLs;
- cooperative companies in the form of an SA;
- public establishments;
- associations of communes;
- agricultural associations;
- non-profit organisations (ASBL);
- religious congregations and associations;
- pension savings associations (ASSEP).
Each type of capital company has specific characteristics with regard to the setup of the business, its partners, management and taxation.
Undertakings for Collective Investment (UCI) which collect savings from the public in order to make investments according to the principle of risk diversification (equities, bonds, etc.) are excluded from said tax. UCIs can take the following legal form of company structure:
- open-ended investment company (SICAV), i.e. a public limited company whose particularity is the variable capital;
- closed-ended investment company (SICAF), i.e. a common-law public limited company with the exception of its investment policy.
How to proceed
Taxation in Luxembourg: the principle of territoriality
Given the territoriality of tax, only companies that have a sufficiently strong connection with Luxembourg have unlimited tax liability.
This is valid for resident companies, i.e. a company that has its registered office or centre of effective management in Luxembourg.
Non-resident companies, i.e. a company whose registered office is not in Luxembourg but that generates Luxembourg income is subject to limited tax liability.
Resident company
Resident companies are taxable on their worldwide income.
However, if the foreign income is collected in a country which has concluded a tax agreement to eliminate double taxation with Luxembourg, the foreign income will be exempt from Luxembourg tax if it was generated by a permanent establishment.
Non-resident company
Non-resident companies are only taxable on their local income in Luxembourg.
Applicable rates
Tax rate
Corporate income tax for resident and non-resident companies has been set at the following rate in 2019:
- 15 % where the taxable income does not exceed EUR 175,000;
- 17 % where the taxable income exceeds EUR 200,000.
An additional charge of 7 % is levied on corporate income tax as a contribution to the employment fund.
Minimum amount of tax
In some cases, businesses are subject to the payment of a minimum tax where the amount set is based on the closing balance in their last annual accounts.
Tax return and payment
Accounting and tax return obligations of the company
The company must declare its taxable income to the Luxembourg Inland Revenue (ACD) that will calculate the amount of tax due by the company and set the terms of payment.
Corporate entities are in principle required to submit an online declaration for corporate income tax with the online assistant on MyGuichet.lu.
The various fields in the assistant can be automatically completed by importing a structured XML file.
Corporate entities excluded from the mandatory online filing must continue to submit their declaration in paper format. These entities are:
- partnerships;
- non-resident companies;
- agricultural associations;
- cooperative companies.
Tax documents - supporting documents
Depending on the company's activity and the applicable tax scheme, the tax return must be submitted together with the accounting documents that have been used to calculate the company results.
In any case, the tax documents must include:
- the balance sheet;
- the profit and loss account;
- table of fixed assets and depreciations;
- the financial statements of the overhead expenses.
The Luxembourg Inland Revenue reserves the right to request additional supporting documents as part of the process of verifying any information, statements, applications, declarations, claims or appeals submitted to its offices.
Payment of tax
Provisional advance payments
Companies subject to corporate income tax make provisional advance payments every quarter on the settlement dates laid down by law (March, June, September, December). The amount of these advance payments has been provisionally set based on the last tax return (from the previous financial year) and automatically adjusted upon request from the company, where applicable.
Balance payable
The company receives back the tax return indicating the tax payable for the current financial year. The tax return shows the remaining balance due taking into account the provisional payments made and the payment deadline (usually one month after receipt of the tax return).
Sometimes the balance is negative; i.e. the company has a claim against the tax authorities. In this case, the reimbursement can:
- be paid on the company's bank account; or
- be deducted from any other amount due by the company to the tax authorities (e.g.: the income tax claim can be deducted from the net wealth tax due).
Exemption
In order to benefit from a tax exemption on a share of the profits, businesses must set up new establishments or develop new processes which are known to contribute to the structural development and improvement of the economy, to the development of the regional economy or to a better geographical distribution of economic activities.
Duration and amount
The exemption is usually limited to a duration of 8 years and 25 % of the profits for new businesses or new processes. It is also limited in relation to a certain percentage of the investments and expenses.
Online services and forms
Online services
Tax year 2023
Tax year 2022
Tax year 2021
Tax year 2020
Tax year 2019
Tax year 2018
Downloadable forms
Note: view tips for using PDF forms.
Who to contact
Luxembourg Inland Revenue (ACD)
-
Luxembourg Inland Revenue (ACD)
- Address:
- 33, rue de Gasperich L-5826 Hesperange Luxembourg
Please consult the above website to find the competent department.
Related procedures and links
Links
Further information
Legal references
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Loi modifiée du 4 décembre 1967
concernant l'impôt sur le revenu
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Loi du 27 juillet 1993 (texte coordonné au 24 mars 1997)
ayant pour objet le développement et la diversification économique
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