Currently Luxembourg companies are subject to 21% CIT, 6.75% municipal business tax (MBT) in Luxembourg City and a solidarity surcharge of 7% of the CIT rate (with therefore a combined rate of 29.22%). The CIT rate for 2017 will be decreased to 19% and for 2018 it will be decreased to 18%. The combined rate will therefore slightly decrease.
The reduction from the CIT rate to below 20% will eventually also bring subsidiaries which are subject to a tax rate of 10% within the scope of the Luxembourg participation exemption (as a subsidiary has to be taxed at a rate of at least 50% of the Luxembourg CIT to be considered “comparable” taxed).
