Tax revenue in Luxembourg (officially the Grand Duchy of Luxembourg) was 38.65% of GDP in 2017, which is just above the average OECD in 2017 (34.19% of GDP).
The most important revenue sources for the government are:
Taxes are administrated by government agencies. The Minister of Finance levies the taxes through the director of Taxation, the revenue offices, and the tax collection offices.
There are two possibilities: either the company is a resident or non-resident.
Resident companies: Luxembourg considers a company to be resident if its management headquarter is in the Grand Duchy. Luxembourg resident companies have to pay taxes on their worldwide income once foreign taxes (where the company is present and earns an income) are deducted.
Non-resident companies: Luxembourg considers a company to be non-resident if its principle place of management is located outside the country.
The only companies that are tax-free are:
 | This article needs to be updated.(June 2021) |
| Taxable Income | Corporate income tax rate |
|---|---|
< € 25,000 | 15% |
€ 25,001 - € 30,000 | € 3,750 + 33% of the tax base above € 25,000 |
> € 30,000 | 18% |
In addition to this, there is a solidarity surtax and a municipality business tax on income.
There is a 7% solidarity surtax amount that is imposed on the corporate income tax. For instance, for companies with a taxable income that exceeds € 30,000, the aggregate corporate income tax rate is 19.26% (18% + 7% × 18%).
This tax is levied by the municipality and varies within each municipality. For the companies that have their management headquartered in Luxembourg City, the municipal business tax is about 6.75%.
For instance, for the companies that have a taxable income that exceeds € 30,000, the effective combined corporate income tax rate is 26.01% (19.26% + 6.75%).
There are additional taxes on business than the corporate income taxes. For example, there is value added tax (VAT), implemented under the framework provided by the VAT Directive (2006/112/EC), with a general rate of 17% (with reduced rates of 14%, 8%, or 3%).
There is also the net wealth tax (IF) which depends on the assets held:
| Assets (EUR) | Net wealth tax |
|---|---|
< 350,001 | €500 |
350,001 – 2,000,000 | €1,500 |
2,000,001 – 10,000,000 | €5,000 |
10,000,001 – 15,000,000 | €10,000 |
15,000,001 – 20,000,000 | €15,000 |
20,000,001 – 30,000,000 | €20,000 |
> 30,000,000 | €30,000 |
Resident individuals:
Luxembourg considers individuals as tax resident if they have their permanent residence (where they are physically present for an uninterrupted period of more than six months) in Luxembourg. Therefore, owning a residence in Luxembourg is not the only condition for tax residence.
People that are resident in Luxembourg are taxed on their worldwide income as though it were earned in Luxembourg. Non-resident individuals are only taxed on their Luxembourg-source income, while part-year residents are taxed at a percentage equivalent to what they would be taxed at if all of their income is earned in Luxembourg. It is possible for non-residents to elect to be treated as though their income is fully from Luxembourg if at least 90% of all income is derived from Luxembourg sources (50% for Belgian-resident individuals).
In Luxembourg, income tax is divided into eight categories:
Taxpayers are classified into three main classes that depends on their personal situation:
Tax is calculated with a progressive rate table, ranging from 0% to 42% depending on income. A solidarity surcharge of 7% of income tax is added to income tax, which increases to 9% for tax class 1 and tax class 1a on incomes greater than € 150,000 and for tax class 2 taxpayers on incomes greater than € 300,000.
As of 2024, the income tax applicable on class 1 taxpayers is according to the following table:
| From (€) | To (€) | Tax rate on income in bracket |
|---|---|---|
| 0 | 12,400 | 0% |
| 12,401 | 14,500 | 8% |
| 14,501 | 16,550 | 9% |
| 16,551 | 18,600 | 10% |
| 18,601 | 20,700 | 11% |
| 20,701 | 22,750 | 12% |
| 22,751 | 24,900 | 14% |
| 24,901 | 27,050 | 16% |
| 27,051 | 29,200 | 18% |
| 29,201 | 31,350 | 20% |
| 31,351 | 33,500 | 22% |
| 33,501 | 35,650 | 24% |
| 35,651 | 37,800 | 26% |
| 37,801 | 39,950 | 28% |
| 39,951 | 42,100 | 30% |
| 42,101 | 44,250 | 32% |
| 44,251 | 46,400 | 34% |
| 46,401 | 48,600 | 36% |
| 48,601 | 50,750 | 38% |
| 50,751 | 110,400 | 39% |
| 110,401 | 165,600 | 40% |
| 165,601 | 220,750 | 41% |
| 220,751 | ----- | 42% |
Deductions are possible for, for example, job-related expenses, commuting allowances, insurance premiums, and loan interest. An income-based tax credit for salaried employment of up to €696 applies to incomes of up to €80,000 (in class 1).
In Luxembourg, social security contributions are payable by employers and employees. They are divided into five types of fund:
There are different rates that are applicable depending on the type of fund and the employment status. In 2024, the rates are as follows:
| Type of fund | Employee rate (%) | Employer rate (%) | Self-employed rate (%) |
|---|---|---|---|
| Health insurance | 3.05 | 3.05 | 6.10 |
| Old-age pension | 8.00 | 8.00 | 16.00 |
| Long-term care insurance | 1.40 | 0.00 | 1.40 |
| Accident insurance | 0.00 | 0.75 | 0.75 |
| Occupation health insurance | 0.00 | 0.14 | 0.00 |
| Employers' mutual insurance fund | 0 | 0.72 – 2.84 | 0.72 – 2.84 |
| Total | 12.45 | 12.66 – 14.78 | 24.97 - 27.09 |
An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them. Income tax generally is computed as the product of a tax rate times the taxable income. Taxation rates may vary by type or characteristics of the taxpayer and the type of income.
A dividend tax is a tax imposed by a jurisdiction on dividends paid by a corporation to its shareholders (stockholders). The primary tax liability is that of the shareholder, though a tax obligation may also be imposed on the corporation in the form of a withholding tax. In some cases the withholding tax may be the extent of the tax liability in relation to the dividend. A dividend tax is in addition to any tax imposed directly on the corporation on its profits. Some jurisdictions do not tax dividends.
In the United Kingdom, taxation may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2014–15, total government revenue was forecast to be £648 billion, or 37.7 per cent of GDP, with net taxes and National Insurance contributions standing at £606 billion.
A wealth tax is a tax on an entity's holdings of assets or an entity's net worth. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts. Typically, wealth taxation often involves the exclusion of an individual's liabilities, such as mortgages and other debts, from their total assets. Accordingly, this type of taxation is frequently denoted as a netwealth tax.
In France, taxation is determined by the yearly budget vote by the French Parliament, which determines which kinds of taxes can be levied and which rates can be applied.
Income tax in Australia is imposed by the federal government on the taxable income of individuals and corporations. State governments have not imposed income taxes since World War II. On individuals, income tax is levied at progressive rates, and at one of two rates for corporations. The income of partnerships and trusts is not taxed directly, but is taxed on its distribution to the partners or beneficiaries. Income tax is the most important source of revenue for government within the Australian taxation system. Income tax is collected on behalf of the federal government by the Australian Taxation Office.
Income taxes in Canada constitute the majority of the annual revenues of the Government of Canada, and of the governments of the Provinces of Canada. In the fiscal year ending March 31, 2018, the federal government collected just over three times more revenue from personal income taxes than it did from corporate income taxes.
The tax system of the Russian Federation is a complex of relationships between fiscal authorities and taxpayers in the field of all existing taxes and fees. It implies continuous communication of all its members and related objects: payers; legislative framework; oversight authorities; types of mandatory payments. The Russian Tax Code is the primary tax law for the Russian Federation. The Code was created, adopted and implemented in three stages.
The Tanzania Revenue Authority (TRA) is the government agency of Tanzania, charged with the responsibility of managing the assessment, collection and accounting of all central government revenue in Tanzania.
Taxes in Switzerland are levied by the Swiss Confederation, the cantons and the municipalities.
Taxes in Iceland are levied by the state and the municipalities. Property rights are strong and Iceland is one of the few countries where they are applied to fishery management. Taxpayers pay various subsidies to each other, similar to European countries that are welfare states, but the spending is less than in most European countries. Despite low tax rates in relation to European welfare states, overall taxation and consumption is still much higher than in countries such as Ireland. Employment regulations are relatively flexible. The tax is collected by Skatturinn, the Iceland Revenue and Customs Agency and is due in March each year.
Taxation in Italy is levied by the central and regional governments and is collected by the Italian Agency of Revenue. Total tax revenue in 2018 was 42.4% of GDP. The main earnings are income tax, social security, corporate tax and value added tax. All of these are collected at national level, but some differ across regions. Personal income taxation in Italy is progressive.
Taxation in Norway is levied by the central government, the county municipality and the municipality. In 2012 the total tax revenue was 42.2% of the gross domestic product (GDP). Many direct and indirect taxes exist. The most important taxes – in terms of revenue – are VAT, income tax in the petroleum sector, employers' social security contributions and tax on "ordinary income" for persons. Most direct taxes are collected by the Norwegian Tax Administration and most indirect taxes are collected by the Norwegian Customs and Excise Authorities.
Taxes in Germany are levied at various government levels: the federal government, the 16 states (Länder), and numerous municipalities (Städte/Gemeinden). The structured tax system has evolved significantly, since the reunification of Germany in 1990 and the integration within the European Union, which has influenced tax policies. Today, income tax and Value-Added Tax (VAT) are the primary sources of tax revenue. These taxes reflect Germany's commitment to a balanced approach between direct and indirect taxation, essential for funding extensive social welfare programs and public infrastructure. The modern German tax system accentuate on fairness and efficiency, adapting to global economic trends and domestic fiscal needs.
Taxation may involve payments to a minimum of two different levels of government: central government through SARS or to local government. Prior to 2001 the South African tax system was "source-based", where in income is taxed in the country where it originates. Since January 2001, the tax system was changed to "residence-based" wherein taxpayers residing in South Africa are taxed on their income irrespective of its source. Non residents are only subject to domestic taxes.
Taxes in Spain are levied by national (central), regional and local governments. Tax revenue in Spain stood at 36.3% of GDP in 2013. A wide range of taxes are levied on different sources, the most important ones being income tax, social security contributions, corporate tax, value added tax; some of them are applied at national level and others at national and regional levels. Most national and regional taxes are collected by the Agencia Estatal de Administración Tributaria which is the bureau responsible for collecting taxes at the national level. Other minor taxes like property transfer tax (regional), real estate property tax (local), road tax (local) are collected directly by regional or local administrations. Four historical territories or foral provinces collect all national and regional taxes themselves and subsequently transfer the portion due to the central Government after two negotiations called Concierto and the Convenio. The tax year in Spain follows the calendar year. The tax collection method depends on the tax; some of them are collected by self-assessment, but others follow a system of pay-as-you-earn tax with monthly withholdings that follow a self-assessment at the end of the term.
In Slovakia, taxes are levied by the state and local governments. Tax revenue stood at 19.3% of the country's gross domestic product in 2021. The tax-to-GDP ratio in Slovakia deviates from OECD average of 34.0% by 0.8 percent and in 2022 was 34.8% which ranks Slovakia 19th in the tax-to-GDP ratio comparison among the OECD countries. The most important revenue sources for the state government are income tax, social security, value-added tax and corporate tax.
Taxes in Croatia are levied by both the central and the regional governments. Tax revenue in Croatia stood at 37.8% of GDP in 2017. The most important revenue sources are income taxes, social security contributions, corporate tax and the value added tax, which are all applied on the national level.
The organization responsible for tax policy in Ukraine is the State Fiscal Service, operating under the Ministry of Finance of Ukraine. Taxation is legally regulated by the Taxation Code of Ukraine. The calendar year serves as a fiscal year in Ukraine. The most important sources of tax revenue in Ukraine are unified social security contributions, value added tax, individual income tax. In 2017 taxes collected formed 23% of GDP at ₴969.654 billion.
Taxation is an important part in the Turkish economy. Turkey has a 41.65% tax to GDP ratio. Most of the taxes are levied by central government. However some specific taxes are levied by municipalities, with the amount determined by centrally issued legislation. Municipalities have no authority to make their own tax laws.