Luxembourg tax update: what's new in 2026?

The new year brings a series of tax changes in Luxembourg. In this update, our tax lawyers summarise key updates to individual taxation, exchange of information and the private wealth management companies (SPF) regime.  

Individual taxation 

Draft changes to carried interest taxation  

On 24 July 2025, the Luxembourg government submitted draft law no. 8590 to parliament, proposing a substantial reform of the tax regime applicable to carried interest.  

As per State Council comments, the draft law shall be amended to clarify the definition of individuals eligible for the regime, specifically those who are either managers, or employed by managers or management companies of alternative investment funds. 

The draft law is still under parliamentary review and it is expected that the new regime will be adopted by early 2026. 

For further details on the proposed carried interest regime, read our briefing: Luxembourg tax updates: key developments in summer 2025.

New tax credit for investment in start-ups 

The Luxembourg law of 19 December 2025 (draft law no. 8526), amending the Luxembourg law of 4 December 1967 on income tax, introduces a new start-up tax credit to stimulate private investment by Luxembourg resident (or assimilated) individual taxpayers in the share capital of young, innovative start-ups. 

Key features of the tax credit 

• Amount: 20% income tax credit on investments in the capital and share premium of an eligible start-up 

• Annual cap: the tax credit is capped at €100,000 per investor and per tax year - any amount exceeding this ceiling cannot be carried forward 

• Minimum investment: €10,000 per eligible start-up, per investor, is required to access the credit 

• Maximum investment per start-up: the benefit is capped to a 30% ownership threshold per investor and a total of €1.5 million per start-up, considering all eligible investors since the start-up’s incorporation 

• Direct investment and holding: the investor must acquire nominal, fully paid-up and directly held shares (not via a holding or transparent vehicle), either at incorporation or as part of a capital increase 

• Holding period: eligible shares must be held directly for a minimum of three uninterrupted years from the end of the year in which the tax credit is claimed 

Interest government bonds 

The Luxembourg law of 19 December 2025 (draft law no. 8633), which amends both the Luxembourg law of 4 December 1967 on income tax and the law of 23 December 2005 (commonly known as the Relibi law), introduces a tax exemption on interest received by Luxembourg resident individuals on certain government bonds. 

Draft changes to single tax class taxation for individuals 

On 6 January 2026, the Luxembourg government introduced draft law no. 8676, which aims to establish a single personal income tax class and transition to full individual taxation. This reform is intended to modernise Luxembourg’s tax system and ensure it more accurately reflects contemporary social and family structures while being more beneficial financially for taxpayers. The proposed changes are scheduled to take effect from 1 January 2028 with a 25-year transitory period for couples previously jointly taxed. 

Exchange of information 

Top-up tax information return 

On 14 April 2025, the Council Directive (EU) 2025/872 (DAC 9), amending Directive 2011/16/EU on administrative cooperation in the field of taxation, was adopted. DAC 9 is closely linked to the Pillar Two Directive and aims to incorporate the OECD’s GloBE top-up tax information return into EU law. 

Luxembourg transposed DAC 9 into domestic law on 17 December 2025 (draft law no. 8591). Additionally, the Grand Ducal Regulation of 19 December 2025 established the framework for the information statement relating to the Pillar Two complementary tax (impôt complémentaire), setting out the required format and reporting obligations. Since 8 January 2026, registration and submission of Pillar Two complementary tax declarations can be completed online via MyGuichet.lu. 

Key implications of DAC 9

• Simplifies the filing obligations of multinational groups, replacing decentralised reporting by each constituent entity with a centralised report filed by the ultimate parent entity or a designated group member 

• Introduces a mechanism for the automatic exchange of top-up tax information returns between EU Member States, consistent with the OECD framework 

Lawyer-client confidentiality  

The Luxembourg law dated 19 December 2025 (draft law no. 8546) amended the Luxembourg law of 25 November 2014, governing the procedure for the exchange of information on request in tax matters, to enhance the protection of lawyer-client confidentiality in Luxembourg. This amendment seeks to bring domestic law into line with case C-432/23 rendered by the Court of justice of the European Union. For further details on the scope and implications of this judgment, please refer to our briefing: Boundaries of attorney-client confidentiality in Luxembourg. 

This law introduces an explicit provision prohibiting any decision requiring a lawyer within the meaning of the amended Law of 10 August 1991 on the legal profession to provide information to the tax authorities when acting as a third-party holder of data in connection with their professional activities of legal representation or legal advice. 

This prohibition applies specifically where the information request originates from the competent authority of another EU Member State. 

Draft changes to crypto-assets reporting  

On 24 July 2025, Luxembourg's government submitted the draft law no. 8592 to parliament, initiating the transposition of DAC 8 into its domestic legislation. The provisions of this draft law closely align with those of DAC 8 and include:  

• new diligence procedures and reporting obligations for crypto-assets service providers   

• extension of the common reporting standard (CRS) scope  

EU Member States are required to transpose DAC 8 into their domestic legislation by 31 December 2025. Luxembourg has not yet transposed DAC 8 into its domestic legislation, but we anticipate that the transposition will occur by early 2026. 

For further details on DAC 8, read our briefing: How DAC 8 affects crypto assets in investment funds.

Private wealth management companies 

The Luxembourg law dated 19 December 2025 (draft law no. 8546) amended the Luxembourg law of 11 May 2007 on private wealth management companies (SPFs). SPFs may now be established as simplified joint-stock companies (sociétés par actions simplifiées). 

For more information on the Luxembourg SPF tax regime, please refer to our article: Private wealth management – have you considered the SPF?

How Ogier can help 

Our tax experts in Luxembourg offer tailor made and innovative tax and legal solutions to help our clients achieve their objectives. If you want to know more about any of the tax updates mentioned above, contact our team. 

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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