Luxembourg proposes lower corporate tax rates and wider income bands

The proposed national corporate tax scale

Article 4(16) would replace Article 174(1) of the Income Tax Law of 4 December 1967. The proposed rate is 13% where taxable income does not exceed €200,000 and 15% where it exceeds €250,000. Between the two thresholds, the Bill specifies €26,000 plus 23% of the income exceeding €200,000.^[1]

The 23% figure is the marginal rate used in the intermediate formula, not a separate headline rate on all profits. The Bill’s commentary illustrates the mechanism: taxable income of €205,000 produces corporate income tax of €27,150; at €250,000, the stated amount is €37,500. These are proposal illustrations, not enacted tax liabilities.^[1]

Comparison with the published administrative text

ACD’s informational coordinated Income Tax Law, updated on 8 May 2026, reproduces Article 174(1) with a 14% rate up to €175,000, an intermediate formula of €24,500 plus 30% of the excess over €175,000, and 16% above €200,000. Its separate tariff guidance describes those parameters as applying from the 2025 assessment year. The coordinated text expressly warns that it is not an official legal consolidation.^[2][3]

The application year remains unresolved

The commentary presents the reduction as intended for assessment year 2027. However, Article 32 places Article 4(16) in an exception to the general 1 January 2027 commencement provision, and the exception’s application year ends at ‘20’ in the deposited text. The general date cannot safely fill that gap; the final legislative wording requires checking.^[1]

For multinational groups, the proposal concerns both the national rate and the profit band into which a Luxembourg business falls. Tax teams can model the stated scale separately from their timing assumptions, but should not treat it as enacted or as a combined all-taxes rate. This focused rate proposal does not resolve the Budget’s separate loss, investment-credit or other business-tax measures.^[1][2]