Luxembourg announces new tax measures to increase competitiveness

During his State of the Nation address on June 11, 2024, Luxembourg's Prime Minister Luc Frieden outlined a series of new tax initiatives aimed at enhancing the country's competitiveness. These measures are as follows:

For Corporations

To encourage continued investment, growth, and job creation by companies, the government plans to:

- Lower the corporate income tax rate from 17% to 16% starting January 1, 2025.

- Reduce the subscription tax for actively managed Exchange Traded Funds (ETFs) beginning with the 2025 tax year.

- Enhance the tax framework for start-ups in the near future.

For Individuals

To promote equality and attract talent to Luxembourg, the government intends to:

- Provide tax relief for single-parent families from January 1, 2025.

- Adjust personal income tax brackets to boost purchasing power starting this year.

- Improve the participative premium and impatriate regime from the 2025 tax year.

Real Estate

The Prime Minister also introduced a 10-point action plan to simplify, expedite, and modernize building procedures in Luxembourg, aiming to increase the number of housing units. This includes:

- Maintaining the mobilization tax.

- Reducing the taxation of capital gains from existing residential units for the current year.

These new tax policies are designed to make Luxembourg more attractive and to support the struggling real estate sector.