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Luxembourg Trading Company

Luxembourg Trading Company and buildingsTwo types of entities are normally used in Luxembourg for commercial activities, i.e. joint-stock companies (Sociétés Anonymes, SA) and or limited-liability companies (Sociétés Anonymes à Responsabilité Limitée, SARL).
Any business conducted through a Luxembourg trading company requires:
- obtaining a business permit, issued by the Ministry of Small Firms and Traders; this authorisation is based on the skills and experience in business management, of the directors or managers, private individuals, of the Luxembourg company; training sessions with the Chamber of Commerce are available should applicants not meet the requirements;

- a head office, which may not be the address of an accredited domiciliation agent; premises must be rented.
SA’s and SARL’s are subject to the same tax and social-security regime.

Luxembourg Taxation

Corporate Tax
Resident corporations are subject to:
- communal income tax,
- communal trade tax,
- wealth tax

Communal income tax (Impôt sur le revenu des collectivités, IRC)
All domestic corporations and foreign companies with a permanent establishment in the Grand Duchy are subject to income tax.
The corporate tax rate, as of 01 January 2009, is capped at 28.59%.

Communal trade tax (Impôt commercial communal, CCI)
Up to 31 December 2001, the trade tax was calculated on each firm’s operating profit. It was collected by the township in which the company had its head offices.
The rate varied from one township to another, but it was normally 9.09%.
As of 01 January 2002, this tax is included in the corporate tax rate (28.59%)

Wealth tax (Impôt sur la fortune, ISF)
The wealth tax is calculated on the value of net assets (gross assets minus total liabilities), as shown on the balance sheet at the end of the period. Buildings account for only a fraction of their value. Major stakes are entirely exempt.
The wealth tax rate is 0.5%.

Dividends paid by a Luxembourg company are subject to a 15% withholding tax as of 2007.
Interest and fees paid by a Luxembourg company are also subject to the 15% withholding tax.
International tax treaties provide for the reduction of tax withholdings, or even their cancellation, as provided for in the Parent-Subsidiary Directive
List of tax treaties signed by Luxembourg

Social obligations
Luxembourg’s social charges are moderate compared to neighbouring countries.
Employers’ social contributions average approximately 12.5%, as do employees’ social contributions.

Interested in Luxembourg company incorporation? Contact us for further information.

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Abroad fiduciaire is a member of the Order of Chartered Accountants of Luxembourg