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Luxembourg: Domestic Corporate Taxation

'Municipal' Business Tax on Profits

The legislative origins of the Municipal Business Tax on Profits (MBTP) are similar to those of the IRC. However it applies to all types of partnership engaged in commercial activity as well as to companies, whether resident or non-resident.

The calculation of taxable income for the MBTP is identical to that for the IRC, with certain specified additions and deductions which are mostly but not entirely concerned to remove the activities of foreign permanent representations (ie those outside Luxembourg), this being a tax paid to the municipality for its services.

The rate of the MBTP varies depending on the municipality from 6% to 12%; in Luxembourg City it is 6.75% in 2012 and 2013. The tax is payable on taxable income over EUR17,500 for companies which are liable to corporate income tax and EUR40,000 for other businesses.

 

 

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