Companies must fulfil their tax obligations, irrespective of whether the taxes levied are direct or indirect, or whether it is a tax or duty.

In Luxembourg, 3 departments are responsible for enforcing tax legislation:

• the Registration Duties, Estates and VAT Authority (Administration de l’enregistrement, des domaines et de la TVA - AED);
• the Luxembourg Inland Revenue (Administration des contributions directes - ACD);
• where applicable, the Customs and Excise Agency (Administration des douanes et accises - ADA).

Who is concerned

All companies established in Luxembourg, regardless of their legal form, are subject to Luxembourg taxation and the general principles applicable thereto.

Certain taxes apply to all the legal forms:

• communal business tax;
• net wealth tax;
• property tax;
• certain taxes (on vehicles in particular);
• indirect taxes: VAT, customs and excise duties.

Other types of taxes apply according to the legal structure of the business:

• sole proprietorships and partnerships are subject to income tax;
• capital companies are subject to corporate income tax.

Preliminary steps

The company must be registered with the competent tax authorities:

• the Registration Duties, Estates and VAT Authority;
• the Luxembourg Inland Revenue;

How to proceed

Principles applied by the tax authorities

When a tax department taxes a company, it must comply with the following principles:

• the lawfulness of the tax: all taxes and forms of taxation must be established by a law that determines their essential elements (tax base, tax assessment and collection). This law may be accompanied by a Grand-Ducal regulation relating to technical aspects (scales, rates);
• equality of taxation: 2 companies that are in the same situation must be treated equally;
• annual adjustment of taxation: as the State budget is allocated for a calendar year, taxation is also based on the year, and specifically on the year elapsed. Tax scales and rates are also subject to annual review by the legislator;
• free choice to opt for the lowest rate of taxation: Luxembourg fiscal law grants the taxpayer the freedom to manage their affairs in such a way as to assume the lowest tax burden. This freedom does not allow tax to be avoided and it differs in this respect from tax evasion.

Principles to be followed by companies

Companies subject to taxation must comply with the following principles:

• to draw up a complete and accurate tax return: in general, any tax or VAT returns completed by the company must reflect reality. These require accurate and regular accounting on the part of the company. Tax fraud, certain forms of tax evasion and, more generally, tax abuse are punishable under Luxembourg law;
• to pay taxes in accordance with deadlines: if a company does not pay its tax by the specified deadline, the competent tax authorities may increase the amount to be paid.

Who to contact