Global Daily Tax News, Luxembourg Tables Law To Implement Budget Tax Changes, (Oct 22, 2025)

The Luxembourg Government has tabled draft legislation for the implementation of measures announced in the nation's 2026 Budget.

The Budget provided that tax will be waived on single parents with gross income up to EUR52,400, and for a EUR922.5 tax bonus per child, per year, for parents not in tax class 1a.

The Government also confirmed plans to introduce a uniform tax bracket, which will benefit 85 percent of taxpayers. The other 15 percent of taxpayers will benefit from a "generous transitional regime".

Corporate tax will be reduced by one percentage point for exchange traded funds, with a further cut proposed for the 2027 tax year. The Government has also committed to enhancing the tax rules for carried interest, earned by fund managers, to boost the territory's appeal as an investment fund domicile.

The Government also announced plans to offer a tax credit for investments in innovative start-up companies, worth up to 20 percent of the invested capital, capped at EUR100,000 per tax year. In addition, a new regime will be introduced for employee share schemes for start-up companies.

The Budget further announced an increase to the deduction for contributions to old-age pensions from EUR3,200 to EUR4,500 per taxpayer.