'%3e%3cpath%20fill='%23eee'%20d='m0%20167%20253.8-19.3L512%20167v178l-254.9%2032.3L0%20345z'/%3e%3cpath%20fill='%23d80027'%20d='M0%200h512v167H0z'/%3e%3cpath%20fill='%23338af3'%20d='M0%20345h512v167H0z'/%3e%3c/g%3e%3c/svg%3e)
Withholding tax in Luxembourg 2026
Luxembourg withholds just 15% on dividends leaving the country — and 0% on interest and royalties — a big part of why the fund industry lives here.
Salaries are withheld through payroll (final for most non-resident employees), and directors' fees carry a 20% withholding that is final up to €100,000 a year.
At a glance
- top rate
- 20% (directors' fees)
- entry band
- 0% on interest and royalties
- tax year basis
- Withheld at payment
- filing deadline
- Final for most; returns only above thresholds
- residency basis
- Luxembourg-source income of non-residents
- regime flag
- 90% rule gives frontier workers full resident treatment
Rates
Withholding on payments to non-residents (2026)
| Rate | Base | Applies to |
|---|---|---|
| 15% | Gross dividend | Dividends from Luxembourg companies — usually final; treaty reductions apply; fund distributions exempt |
| 0% | — | Interest and royalties paid to non-residents |
| 20% | Gross fees | Non-executive directors' fees — final up to €100,000/year of such income |
| Payroll scale | Salary | Luxembourg employment income — final unless 9+ months' work or assessment requested |
| 10% | 90% of gross salary | Non-resident seafarers on Luxembourg-flag vessels |
Thresholds & allowances
- Resident-equivalence electionTaxed as a resident with all deductions
Requires 90% of worldwide income taxable in Luxembourg (first 50 foreign workdays count as Luxembourg income), or under €13,000 of other income
Residency
Residency trigger
These rules cover non-residents' Luxembourg income; a 15% minimum rate (plus surcharge) applies to some assessed income like rents.
Non-resident treatment
Arriving individuals get a value step-up on 10%+ shareholdings, so gains accrued before becoming resident stay out of Luxembourg's reach — mirrored by only limited taxing rights over departed residents (15-year former residents sold within 5 years of leaving).
Notes
- The 0% on interest and royalties is unconditional under domestic law — no treaty needed.
- Non-resident couples reach class 2 splitting only when 90% of household professional income is Luxembourg-taxed.
- An EU-wide fast-refund system for excess withholding applies from 2030; Luxembourg has not yet transposed it.
- Artists and sportspeople performing in Luxembourg are taxable here on those fees by assessment.
FAQ
What does Luxembourg withhold on payments abroad?
15% on dividends (often reduced by treaty; fund distributions exempt) and 0% on interest and royalties — among the lightest outbound withholding in Europe.
Can frontier workers get Luxembourg resident treatment?
Yes — with 90%+ of worldwide income taxable in Luxembourg (the first 50 foreign workdays count as Luxembourg income), or under €13,000 of other income, you elect resident-style taxation with full deductions and class 2 splitting.
Figures: tax year 2026, compiled from public sources. Not tax advice.