LUXEMBOURG Law and Practice Contributed by: Frédéric Feyten, Alejandro Dominguez Becerra, Gérard Maîtrejean and Pawel Hermeliński, CMS
assets), taxation will occur only when the taxpayer disposes of a substantial participation (broadly, more than 10% of the share capital) within six months as from the shares’ acquisition subject to the application of a relevant DTT. In addition, given that Luxembourg tax law does not assimilate property rich companies to real estate, the sale of the shares of a Luxembourg company holding mainly real estate assets will, in prin - ciple, not be subject to registration duties. Certain investment vehicles such as SIFs and stand - ard RAIFs (ie, taxed similarly to a SIF) may be used to hold Luxembourg real estate. In such event, income and gains would not be subject to CIT or MBT, nor the real estate be subject to NWT although a real estate levy may apply in certain cases. 1.5 Stability of Tax Laws Luxembourg is known for its stable and predictable tax environment, which is a key factor in its attractiveness for international clients, particularly high-net-worth individuals and families seeking long-term private wealth and estate planning solutions. This stability is underpinned by Luxembourg’s strong legal, political, and financial foundations. Historically, Luxembourg has demonstrated a commitment to maintaining a competitive tax regime, particularly for ultra-high-net- worth individuals (UHNWIs) and estates. Concomi - tantly, as a member of the European Union and the Organisation for Economic Co-operation and Devel - opment (OECD), Luxembourg is subject to ongoing international tax developments, including anti-avoid - ance measures and transparency initiatives with a tax regime compliant with such framework. While the core principles of Luxembourg’s tax system remain stable, the jurisdiction has shown adaptability in response to international standards, which can introduce a degree of uncertainty for clients engaged in long-term tax and estate planning. Recent Developments In recent years, Luxembourg has implemented several significant tax reforms, largely in response to interna - tional initiatives. • Implementation of ATAD and DAC6 – Luxembourg has transposed the EU Anti-Tax Avoidance Direc - tives (ATAD) and the Directive on Administrative
Cooperation on reporting of cross border arrange - ments (DAC6) into domestic law. • Increased Transparency – Luxembourg has enhanced its transparency regime, including the establishment of registers of beneficial ownership for companies, trusts, and foundations. This has increased the reporting obligations for HNWIs and their advisers. • Wealth Tax and Inheritance Tax – Luxembourg does not levy a wealth tax on individuals, and inherit - ance tax is generally low, especially for transfers between close relatives. There have been no recent proposals to introduce or significantly increase these taxes, but the government continues to review its tax policy in light of international trends. Proposed Changes As of 2025, there are no major legislative proposals that would fundamentally alter the tax treatment of private wealth in Luxembourg. Importantly, the current government has publicly reaffirmed its intention not to increase taxes, reinforcing Luxembourg’s position as a fiscally stable and investor-friendly jurisdiction. Impact on Planning While the tax environment remains fundamentally stable, clients must remain attentive to the increas - ing focus on transparency, economic substance, and anti-abuse provisions. 1.6 Transparency and Increased Global Reporting Luxembourg has taken significant steps in recent years to address both real and perceived abuses or loopholes in its tax laws. This has been driven by both domestic policy objectives and, more importantly, by its obligations as a member of the European Union and participant in global tax transparency initiatives. The country aligned itself with international standards, thereby enhancing its reputation as a responsible and transparent financial centre. In this respect, Luxembourg has adopted the OECD’s Common Reporting Standard (CRS) and implement - ed US foreign Account Tax Compliance Act (FATCA) which require to identify and report information on accounts held respectively by foreign/US persons to the Luxembourg tax authorities which then exchange
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