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Dividend tax in Luxembourg 2026
Luxembourg withholds 15% on dividends, then taxes only half of qualifying dividends (from EU parent-subsidiary companies or treaty-country companies with comparable tax) at your progressive rates — the withholding credits against the final bill.
A €1,500 exemption (doubled for joint filers) shelters small investment income entirely.
At a glance
- top rate
- ≈ 22.9% effective on qualifying dividends for top-rate taxpayers (half of 45.78%)
- entry band
- €1,500 of investment income exempt (€3,000 joint)
- tax year basis
- Calendar year
- filing deadline
- Via the annual return; 15% withheld at source
- residency basis
- Residents: worldwide dividends (foreign ones get the same 50% relief if qualifying)
- regime flag
- Interest is settled separately by a 20% final withholding
Rates
How investment income is taxed (2026)
| Rate | Base | Applies to |
|---|---|---|
| Progressive rates on 50% | Half the dividend | Dividends from EU/treaty companies with comparable tax — after the 15% withholding credit |
| Progressive rates on 100% | Full dividend | Non-qualifying dividends (e.g. low-taxed or non-treaty payers) |
| 20% final | Gross interest | Bank and bond interest paid by Luxembourg (or opted European Economic Area (EEA)) paying agents — no return needed |
| 0% | — | Savings interest up to €250 per year per bank |
Thresholds & allowances
- Investment-income exemption€1,500 (€3,000 joint)
Applies to dividends and other declared movable income
- Standard cost deduction€25 (€50 joint)
In lieu of actual custody and agent fees
Surcharges
- Dependency contribution1.4%over Investment income of residents
Residency
Residency trigger
Residents declare worldwide dividends; the 50% exemption extends to foreign payers that are EU parent-subsidiary companies or treaty-resident companies paying comparable tax.
Non-resident treatment
Non-residents bear the 15% withholding as a final tax on Luxembourg dividends (treaty reductions apply); Luxembourg charges no withholding on interest or royalties paid to non-residents.
Notes
- The 20% interest withholding is final and anonymous for residents — bank interest never appears in the return.
- Dividends from Luxembourg investment funds are exempt from withholding entirely.
- Foreign withholding is creditable, generally per country; an optional overall method caps credits at 25% per item and 20% of total Luxembourg tax.
FAQ
How are dividends taxed in Luxembourg?
15% is withheld at source, then only 50% of qualifying dividends is taxed at your progressive rates — an effective ceiling near 23% for top earners, with the first €1,500 of investment income exempt.
Is bank interest taxed in Luxembourg?
Through a flat 20% withholding that is final for residents — interest under €250 a year per bank is exempt, and nothing needs declaring.
Figures: tax year 2026, compiled from public sources. Not tax advice.