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Luxembourg tax guide 2026
Luxembourg's tax system is built for its cross-border workforce and fund industry: 23 income tax brackets rising to 42% (45.78% with the employment-fund surcharge), a 15% dividend withholding with half of qualifying dividends exempt, and a quietly generous rule that private capital gains on shares and crypto vanish entirely after 6 months' holding. Spouses and children inherit largely tax-free, and an impatriate regime exempts half of a relocation premium worth up to €400,000.
- Rate range
- 0% – 42% (+7%/9% employment-fund surcharge; top marginal 45.78%)
- Key allowance
- First €13,230 tax-free; capital gains on movable assets exempt after 6 months
- Tax year
- Calendar year
- Filing deadline
- 31 December of the following year (the filing window opens in early April)
Taxes covered
- Income tax42% (45.78% marginal)
42% above €234,870, plus a 7%–9% employment-fund surcharge on the tax — a 45.78% true top marginal rate — and a 1.4% dependency contribution.
- Dividend tax15% withheld, half taxed
15% withholding at source; qualifying dividends are then only 50% taxable at your progressive rates, with a €1,500 investment-income exemption.
- Capital gains tax0% after 6 months
Private gains on shares are exempt after 6 months (unless the stake exceeds 10%); quick flips at full rates; long-held property at half your average rate.
- Crypto tax0% after 6 months
Crypto follows the movable-asset rules: tax-free after 6 months' holding, full progressive rates on quicker sales above €500 a year.
- Social security≈ 12.95%
Employees pay 8.5% pension + 3.05% health + 1.4% dependency, on salary capped at €13,518.68 a month (the dependency part is uncapped).
- Inheritance tax0% – 48%
Spouses and direct-line heirs largely 0%; siblings from 6%, unrelated heirs 15% — all multiplied up to 48% max on shares above €1.75 million.
- Withholding tax15% / 0%
Non-residents: 15% on dividends and nothing on interest or royalties — one of Europe's lightest outbound regimes.
Special regimes
- Impatriate regime
Recruited to Luxembourg on €75,000+? An impatriation premium is 50% tax-exempt up to 50% of your salary (premium capped at €400,000), plus tax-free relocation and housing costs to €50,000 — for up to 8 years.
- 6-month capital gains exemption
Sell shares, funds or crypto after more than 6 months and the private gain is simply untaxed — only quick flips and 10%+ stakes are caught.
- Profit-sharing premium
Employers can pay a bonus that is 50% tax-free, up to 30% of your annual salary, within a pool of 7.5% of company profits.
- No wealth tax, minimal death taxes
The net wealth tax on individuals ended in 2006; spouses inherit at 0% and children pay nothing on their lawful share.
- Young employee bonus
Under-30s on a first permanent contract get a bonus that is 75% tax-exempt — up to €5,000 a year for salaries below €50,000, for 5 years.
Recent changes
- 2026-01The social security contribution ceiling rose to €13,518.68 a month; the third-pillar pension deduction increased to €4,500 a year.
- 2026-01A new employment-continuation allowance (up to €9,000 a year) rewards working past early-retirement eligibility, and a 20% tax credit for investing in innovative start-ups arrived (capped at €100,000 a year).
- 2025-01Brackets were widened (0% band now to €13,230), the impatriate premium exemption rose to 50% of salary, and the single-parent credit reached €3,504.