Taxes by postcode: Why companies are not taxed the same everywhere

Two companies with identical profits do not necessarily pay the same amount of business tax in Luxembourg. What matters is not only how much they earn – but where they are located.

Since 1936, the municipalities have been able to levy the "impôt commercial communal" (ICC, see info box). They set the tax rate themselves. The resulting differences can fundamentally determine where a company sets up shop. Or rather, where it "could" set up.

This is because craft businesses in particular are desperately looking for free space in business parks across the country. "Unfortunately, the situation today is that there are currently not enough plots of land in business parks in Luxembourg, so that taxation as a criterion takes a back seat, because first of all you have to find a suitable plot of land at the right price, " explained the Chamber of Skilled Crafts in response to a written enquiry from the Journal.

Other criteria then take centre stage. Craft businesses want to be well connected in terms of access routes for employees and customer orders. Bakeries and clothing shops look for locations where there are enough customers. For industrial companies, on the other hand, other factors can be decisive – availability of water for cooling processes or proximity to freight terminals.