Luxembourg Income Tax
Our tax guide for freelance contractors working in Luxembourg
Individuals residing in Luxembourg are taxed on their worldwide income and non-residents only on their Luxembourg sourced income. Individuals are considered tax resident if they have their customary place of abode or centre of economic interests in Luxembourg. The income of married couples is aggregated for tax purposes. Unmarried taxpayers living together who have registered a partnership agreement (“civil partners”) are not taxed jointly, but they may be granted a special tax allowance of up to EUR 9’780 on request.
Taxable income includes employment income, most benefits in kind, income from property, dividends, etc. Certain deductions are permissible including a lump-sum expense deduction for household and childcare costs to a maximum of EUR 3’600, and there exist personal allowances of varying amounts according to tax class.
The rates of income tax range from 0% for an annual aggregate income under EUR 10’335 to 38% for revenues over EUR 36’570. Income tax computed according to these tax bands is increased by a 2.5% surcharge for the employment fund, resulting in a maximum marginal tax rate of 38.95%. A split rate applies for jointly assessed spouses.