LUXEMBOURG Law and Practice Contributed by: Frédéric Feyten, Alejandro Dominguez Becerra, Gérard Maîtrejean and Pawel Hermeliński, CMS
CMS 5 Rue Charles Darwin 1433 Gasperich Luxembourg Tel: +352 2627 5340 Email: marketing@cms-dblux.com Web: cms.law/en/lux/
1. Tax 1.1 Tax Regimes
Wealth Taxes Since 2006, Luxembourg does not levy net wealth tax on individuals. Capital Gains Taxation Capital gains taxation varies depending on the asset type and residency status. Capital gains on movable assets • Short-term gains – gains on movable assets (such as shares or securities) realised within six months of their acquisition are fully taxable as miscellane - ous income. • Long-term gains – if the holding period exceeds six months, capital gains on the sale of movable assets are generally tax-exempt, unless the individ - ual (alone, together with his/her spouse or partner and minor children) holds a substantial sharehold - ing (broadly, more than 10% of the share capital) in certain Luxembourg companies at any time during the five years preceding the transfer. • Gains on substantial shareholdings – for disposals of substantial shareholdings after a holding period that exceeds six months, capital gains are taxable at a half PIT rate. An exemption of EUR1,500 (or EUR3,000 for mar - ried couples) applies to income from movable assets, which must be reported on a tax return. Capital gains on immovable properties Capital gains realised by an individual upon the sale of his/her main residence are fully tax exempt. For the other real estate assets, the tax treatment will depend on the holding period.
Luxembourg’s tax system is comprehensive and pri - marily based on the principles of residence and source taxation. The main tax regimes relevant to individual clients, estates, trusts, and foundations are as follows. Personal Income Taxes Individuals who have their domicile or usual abode in Luxembourg will be considered tax resident and will be subject to personal income tax (PIT) on their world - wide income subject to the application of any relevant double tax treaty (DTT) signed by Luxembourg. A person’s domicile is the location where they main - tain a residence under conditions suggesting they intend to keep and use it. An individual is considered to have a habitual place of residence in Luxembourg if they have continuously stayed in the country for at least six months. This six-month period may span two different tax years, and brief absences are not taken into account. Individuals who are not tax resident in Luxembourg will only be subject to Luxembourg PIT on their Lux - embourg source income. PIT rates are progressive, ranging from 0% up to 42%, plus a solidarity surcharge for employment fund of 7% or 9%, depending on the taxpayer’s level of income. The maximum tax rate, including the surcharge, amounts to 45.78% for the 2025 tax year.
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