Tax
Luxembourg : Upcoming tax changes for 2025
After a reduction of the minimum tax burden (Bill 8388), new measures (Bill 8414) are proposed to further alleviate the tax burden for taxpayers starting from the 2025 fiscal year, whether it be the Personal Income Tax (IRPP) or Corporate Income Tax (IRC).
Legal Entities
Reduction of the Corporate Income Tax (IRC) rates by 1% (Article 174 LIR):
- Tax base below €175,000: 14% + CFE = 14.98% (formerly: 15% + CFE = 16.05%)
- Tax base above €175,000: 16% + CFE = 17.12% (formerly: 17% + CFE = 18.19%)
- Tax base between €175,000 and €200,000: reduction of 1% as well
Individuals
- Participation Bonus: Increase of the various thresholds: 7.5% of the profit (formerly 5%) and 30% of the annual gross salary (formerly 25%) (Article 115-13a LIR)
- Introduction of a youth employee bonus: 75% exemption of the bonus ranging from €2,500 to €5,000 depending on the young worker's salary (first employment contract and under 30 years old) (Article 115-13d LIR)
- Introduction of a tax credit for overtime (CIHS): amount up to €700/year under certain conditions (Article 154terdecies LIR)
- Modification of tax scales (Articles 118-120bis LIR)
- Modification of the child allowance for children not part of the household (Article 127bis LIR)
- Modification of the minimum social wage tax credit (CISSM) (Article 139quater LIR)
- Increase of the single-parent tax credit (CIM) (Article 154ter LIR)
- Modification and alleviation of the impatriate regime (Article 115-13b LIR)
In parallel with these alleviations, the bill also provides for the following measures:
- Increase of the subscription tax minimum: minimum €1,000 compared to €100 currently
- In case of non-compliance with obligations, the Director of the Registration Duties, Estates and VAT Authority (AED) may impose fines up to €10,000 or €250,000 depending on the violations.
We encourage you to anticipate these upcoming changes.
Please do not hesitate to contact us for any questions or need for clarification.