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.
Corporate income tax applies mainly to the following legal forms of capital companies:
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 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 companies are only taxable on their local income in Luxembourg.
Corporate income tax for resident and non-resident companies has been set at the following rate in 2019:
An additional charge of 7 % is levied on corporate income tax as a contribution to the employment fund.
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.
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:
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 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.
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.
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:
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.
The exemption est 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.
Impôt des collectivités (impôt sur le revenu, impôt commercial 2018, impôt sur la fortune 2019)
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Impôt des collectivités (impôt sur le revenu, impôt commercial 2017, impôt sur la fortune 2018) - service en ligne
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Corporate income tax (Income tax, Business tax 2016, Net wealth tax 2017) - online service
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Körperschaftsteuer (Einkommensteuer, Gewerbesteuer 2016, Vermögensteuer 2017) - Online- Assistent
Corporate income tax (Income tax, Business tax 2015, Net wealth tax 2016) - online service
Impôt des collectivités (impôt sur le revenu, impôt commercial 2015, impôt sur la fortune 2016) - service en ligne
Körperschaftsteuer (Einkommensteuer, Gewerbesteuer 2015, Vermögensteuer 2016) - Online- Assistent
Corporate income tax (Income tax, Business tax 2014, Net wealth tax 2015) - online service
Impôt des collectivités (impôt sur le revenu, impôt commercial 2014 et impôt sur la fortune 2015)- service en ligne
Körperschaftsteuer (Einkommensteuer, Gewerbesteuer 2014, Vermögensteuer 2015) - Online- Assistent