LUXEMBOURG Trends and Developments Contributed by: Romain Tiffon and Marie Bentley, ATOZ Tax Advisers
The Latest in Private Wealth in Luxembourg in 2025 Luxembourg continues to evolve as a premier juris - diction for private wealth management, driven by leg - islative reforms, tax incentives, and regulatory clar - ity. Luxembourg’s Minister of Finance, Gilles Roth, recently emphasised the importance of seizing current geopolitical and technological shifts as opportunities to enhance Luxembourg’s competitiveness. In this respect, the authors can highlight several reforms initi - ated over the past year, including the modernisation of the impatriate tax regime (allowing a 50% tax exemp - tion on gross annual salaries up to EUR400,000), the improvement of the profit-sharing regime (prime par - ticipative), and the introduction of an exemption from subscription tax for active ETFs (Exchange-Traded Funds). The authors can also note a 1% reduction in the corporate tax rate and significant legislative updates such as the blockchain law and the transpo - sition of the MiCA Directive, which provides a flexible regulatory framework for cryptocurrencies. Additionally, a draft law has been submitted to intro - duce a new start-up tax credit. Furthermore, a new stock option regime for start-up employees, with a competitive capital gains tax treatment to support early stage innovation and investment, is expected to be submitted to parliament before year-end. Luxembourg’s Minister of Finance also recently unveiled a series of tax-focused initiatives aimed at reinforcing Luxembourg’s competitiveness in the financial sector. Central to these measures is the modification of the carried interest regime designed to attract more fund managers to Luxembourg, respond - ing to long-standing industry demands and position - ing the jurisdiction favourably against developments in the UK and southern Europe. Complementing this, the Luxembourg government has finally announced the launch of a government-backed programme supporting start-ups that develop digital solutions for the fund industry. Also emphasised was its commitment to integrating artificial intelligence (AI) into finance, including plans for a flagship AI and fin - tech conference in 2026 as well as the establishment of an AI Experience Centre. Additionally, Luxembourg has taken a pioneering step in digital finance with the
issuance of its first digital treasury certificate, offering faster processing, enhanced security, and full trans - parency for investors; all of which are part of a broader strategy to develop a digital sovereign budget and set a benchmark within the eurozone. This article explores the most relevant changes affect - ing private wealth in Luxembourg, with a focus on tax reforms and investment incentives. Extension of real estate tax incentives: new opportunity to diversify Access to housing remains a critical issue in Luxem - bourg, not only for its citizens but also for attracting international talent. To address this, a comprehensive real estate tax reform is underway. Initially introduced in 2023 by the previous government, the reform has recently been revived by the current administration. Its primary aim is to make housing more accessible through a series of tax measures. In the interim, a law adopted in 2024 introduced both permanent and temporary tax incentives designed to boost housing supply and support individuals in purchasing or rent - ing homes. These measures also present opportuni - ties for private wealth management. Originally intended for the 2024 fiscal year only, the temporary measures were part of an initial package to stimulate the construction sector. However, due to encouraging signs of recovery in property transac - tions, these incentives were first extended for an addi - tional six months, through 30 June 2025 and then for an additional period of three months, through 30 Sep - tember 2025 provided that preliminary agreements are registered with the tax authorities by 30 June 2025. To support the housing market, Luxembourg extend - ed the following temporary tax incentives. • Reduction in Registration and Transcription Duties – a 50% reduction in the taxable base for registra - tion and transcription duties applies to acquisi - tions of residential or rental property. The benefit is available where the notarial deed is executed by 30 June 2025, or by 30 September 2025 if a reserva - tion or preliminary sale agreement is registered with the tax authorities by 30 June 2025.
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