LUXEMBOURG Trends and Developments Contributed by: Romain Tiffon and Marie Bentley, ATOZ Tax Advisers
New tax incentives targeting private investors Start - up tax credit : a new opportunity for private investors Since 1 January 2026, a new tax credit encouraging individuals to invest in young and innovative compa - nies is available for Luxembourg individual taxpayers. This initiative, known as the “Start-Up Tax Credit” aims to boost the country’s appeal as a hub for innovation by improving early-stage financing for start-ups. To qualify for the tax credit, the investor must: • be an individual Luxembourg tax resident or assimilated non-resident; • not be an employee or founder of the start-up; • invest directly in and hold new fully paid-up shares in a start-up entity – investments made through partnerships or businesses do qualify; • invest at least EUR10,000; and • hold the shares for at least three years without interruption – if the shares are sold or the company is liquidated within three years, the tax benefit may be revoked, except in cases such as bankruptcy or the investor’s death or disability. The company receiving the investment must qualify as a start-up entity and: • be a Luxembourg resident company or a perma - nent establishment of a collective entity estab - lished in an EEA member state; • be less than five years old at the end of the tax year; • employ fewer than 50 people and have total assets or annual turnover under EUR10 million; and • be engaged in innovative activities, with at least two full-time contributors and R&D expenses mak - ing up at least 15% of operating costs in one of the last three years. However, certain sectors are excluded, such as law firms, real estate companies, and publicly traded enti - ties. This measure, aligned with broader EU trends, aims to encourage private capital to support innovation and entrepreneurship. For high-net-worth individuals
In this context, Luxembourg’s tax environment contin - ues to provide a robust and reliable basis for long-term wealth planning. It supports a wide spectrum of struc - turing strategies, including intergenerational asset transmission, portfolio investment and cross-border holding arrangements. As such, Luxembourg remains a jurisdiction of choice for high-net-worth individuals seeking both tax efficiency and a high degree of legal certainty, thereby reinforcing its position as a key hub for inbound private wealth structuring. Continued use of multi - layered wealth structuring arrangements Private wealth planning in Luxembourg in 2026 con - tinues to rely on the combined use of complementary legal structures, typically including: • Sociétés de gestion de patrimoine familial (SPF), which benefit from a specific tax-exempt regime designed for the passive holding of financial assets; • Sociétés de participations financières (SOPARFI), fully taxable entities offering access to Luxem - bourg’s extensive double tax treaty network and EU directives; and • regulated or unregulated investment vehicles (such as SICAVs and FCPs), enabling diversification and professional asset management. Private wealth planning in Luxembourg relies on these complementary structures to combine tax neutrality for asset holding, effective access to treaty benefits, and diversified investment management within a coherent and compliant legal framework. In this respect, recent legislative developments have confirmed the authorities’ intent to preserve the attractiveness of these vehicles while reinforcing their proper use. In particular, the 2025 reform of the SPF regime has introduced targeted adjustments, includ - ing an increase of the minimum annual subscription tax from EUR100 to EUR1,000, enhanced supervisory powers, and the introduction of graduated adminis - trative sanctions for non-compliance. While these changes do not alter the fundamental tax neutral - ity of the SPF, they reflect a clear policy shift toward strengthened oversight and compliance.
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