LUXEMBOURG Law and Practice Contributed by: Frédéric Feyten, Alejandro Dominguez Becerra, Gérard Maîtrejean and Pawel Hermeliński, CMS
14.4% depending on the relationship between donor and donee. Luxembourg law is extremely favourable to inherit - ance so that family assets can be passed on from generation to generation, without the family wealth suffering in the process. As mentioned in 2.4 Mari- tal Property , insofar as the deceased had his/her last domicile in the Grand Duchy of Luxembourg, the transfer will be subject to Luxembourg inheritance tax (except in the case of real estate located abroad, for which the law governing the location of the property is applicable). Inheritance tax rates vary between 0% and 15% depending on the relationship between the deceased and the heir. The net market value of the property is taken into consideration for the calculation of inheritance taxes. For direct tax purposes, inheritance and gifts are not considered as income-generating events. The assets are deemed to be acquired free of charge. Therefore, the acquisition price to be considered is the price paid by the previous holder who last acquired the asset for valuable consideration. This acquisition price is then revalued by applying a coefficient corresponding to the year in which the expenditure was incurred. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms Given that inheritance taxes are quite low, particularly in the direct line, no specific planning is required to transfer assets in Luxembourg. In addition, manual gifts are not subject to gift taxes. There is a growing interest in the use of foreign trusts and foundations. The former may be recognised under Luxembourg law (refer to 1. Tax ). Subject to certain conditions, the use of trust provides for tax neutrality from CIT, MBT and NWT perspective. Depending on how the trust is structured it also allows to transfer assets with limited registration duties upon the trust constitution. The split between bare ownership and usufruct is also a tool to limit both inheritance and gift tax. 2.7 Transfer of Assets: Digital Assets In Luxembourg, succession law is primarily governed by the Civil Code, which does not specifically address
digital assets. The general principle is that all assets forming part of the deceased’s estate, whether tangi - ble or intangible, are transferred to the heirs or lega - tees according to the rules of succession. Therefore, digital assets are subject to inheritance tax in Luxem - bourg in the same way as other movable or intangible assets. The applicable rates depend on the relation - ship between the deceased and the heir. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Luxembourg offers a range of vehicles that is favour - able for international wealth structuring. Depending on their needs, families can choose between regulated and non-regulated entities. Charitable foundations and charitable associations can be set up and governed by law in Luxembourg. They can be structured to meet specific philanthropic or family objectives. However, trusts cannot be set up in Luxembourg, but Luxembourg recognises foreign trusts that are governed by the law of another jurisdic - tion under the Hague Convention of 1985 on the law applicable to trusts and on their recognition. Soparfi The Soparfi is a commercial acronym to refer to a holding company, is a fully taxable company that is subject to CIT including solidarity surcharge and MBT at the aggregate rate of 23.87% for Luxembourg City for 2025. The Soparfi is also subject to net wealth tax (NWT) which is levied at the rate of 0.5% on the unitary value ( valeur unitaire ) up to EUR500 million and at the rate of 0.05% on the unitary value exceeding EUR500 million. A minimum NWT which varies from EUR535 and EUR4,815 is payable when the standard NWT results in a lower tax liability. As a fully taxable com - pany, the Soparfi is entitled to EU tax directives and as such benefits from certain exemptions (eg, dividends, liquidation proceeds, and capital gains) under certain conditions. Distributions made by the Soparfi are in principle subject to the Luxembourg 15% withhold - ing tax (WHT) unless an exemption applies. Finally,
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