LUXEMBOURG Trends and Developments Contributed by: Romain Tiffon and Marie Bentley, ATOZ Tax Advisers
Luxembourg: An Attractive Jurisdiction for Private Wealth Planning In 2026, Luxembourg’s private wealth landscape is characterised by a combination of continuity and tar - geted evolution, reinforcing its position as a leading jurisdiction for high-net-worth individuals and interna - tional investors, both in terms of personal residency relocation and also the structuring of non-resident individuals’ wealth. While the Grand Duchy contin - ues to rely on the stability of its core tax framework, recent developments illustrate a clear policy direction toward enhanced compliance, selective tax incentives and increased alignment with international standards. A first defining feature of this landscape is the con - tinued tax attractiveness for individuals. Luxembourg remains particularly competitive due to the absence of net wealth tax, the non-application of inheritance tax in the direct line and a generally favourable capital gains tax regime. Alongside this continuity, Luxembourg has introduced targeted tax incentives aimed at mobilising private capital, particularly in support of innovation and eco - nomic development. The introduction of a start-up tax credit as from 1 January 2026 provides individ - ual investors with a structured incentive to invest in early-stage companies, thereby facilitating access to financing for innovative businesses. Additional meas - ures, such as the exemption of interest on certain government bonds, further contribute to diversifying investment opportunities for private investors. Finally, a major development in 2026 lies in the mod - ernisation of the carried interest regime, a key com - ponent of Luxembourg’s attractiveness for fund man - agers and private equity professionals. The reform clarifies and expands the existing framework, aligning it more closely with market practice and international standards, while preserving a favourable tax treat - ment. In particular, it confirms the capital-type char - acter of carried interest and extends the scope of eligi - ble beneficiaries, thereby strengthening Luxembourg’s position as a leading hub for alternative investment structures, not only regarding fund domicile but also the residence of executives.
At the same time, this attractiveness is now combined with a clear shift toward transparency and compli - ance, notably through the implementation of OECD and EU-driven reporting obligations, including DAC8 and DAC9. Luxembourg is therefore increasingly posi - tioning itself not as a jurisdiction competing on opac - ity, but rather as one offering robust, compliant and predictable legal and tax frameworks. This dual dynamic is further reflected in the contin - ued use of multi-layered structuring arrangements, which remain central to private wealth planning. Such strategies typically rely on a combination of SPFs, SOPARFIs and investment vehicles (such as SICAVs or FCPs), allowing investors to balance tax neutrality for asset holding, access to treaty benefits and diver - sified asset management within a coherent structure. Against this background, the Luxembourg private wealth environment in 2026 reflects a careful bal - ance between stability and adaptation, combining long-standing tax advantages with targeted reforms designed to enhance competitiveness, ensure compli - ance and support emerging investment trends. Continuity Continued tax attractiveness for individuals As of 2026, Luxembourg continues to distinguish itself as a leading jurisdiction for private wealth structuring, primarily due to the stability and predictability of its core tax framework. The fundamental pillars under - pinning its attractiveness remain unchanged. Notably, resident individuals are not subject to net wealth tax, inheritance tax is not levied in a direct line (ie, transfers between parents and descendants), and the capital gains tax regime remains broadly favourable, with exemptions frequently available subject to applicable holding thresholds and conditions. Importantly, these fundamental pillars have remained unchanged, reflecting a deliberate choice by the leg - islator to preserve legal certainty and avoid disruptive reforms in the taxation of private individuals. In a glob - al context marked by increased tax harmonisation and heightened scrutiny of cross-border wealth structures, such stability constitutes a key differentiating factor and continues to support long-term wealth planning and inbound structuring strategies.
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