Luxembourg is a high-tax country with one of Europe's most generous breaks for new arrivals. If you're hired or seconded from abroad on a fixed salary of €75,000 or more, half your pay can be tax free until the end of the eighth year after you start work.
This guide covers Luxembourg personal tax for people moving to or living in Luxembourg in the 2026 tax year, including the impatriate regime, the six-month residence rule, the 2026 tax scale, social security and how investments and crypto are taxed.
The key question is simple. Are you an employee recruited from abroad, or self-employed? Luxembourg treats the two very differently.
What's changed: since the 2025 tax year, the impatriate regime exempts 50% of your total pay, capped at €400,000, instead of a share of an expatriation bonus. The tax bands were raised from 2025 and are unchanged for 2026. From 1 January 2026, the overall pension contribution rose from 24% to 25.5%, so employees now pay 8.5%. A government bill now before parliament would bring in a single tax class from 1 January 2028, with a tax-free band of €26,650. That's Proposed, not law.
📋 Luxembourg tax at a glance for 2026
Topic | Details |
|---|---|
Tax system | Worldwide income for residents, with treaty relief for foreign income |
Top income tax rate | 42% above €234,870, plus a 7% or 9% solidarity surcharge on the tax. The first €13,230 is tax free in class 1 |
All-in on a US$100k salary | About 16% with the impatriate regime, or about 34% without it (about €87,000, single, tax class 1, including social security) |
Special regime | Impatriates: 50% of pay exempt, on pay up to €400,000, until the end of the eighth year after you start |
Dividends, interest, capital gains | Half of qualifying dividends exempt. 20% final tax on interest paid in Luxembourg. Gains on shares held over six months exempt for holdings of 10% or less |
Crypto gains | Exempt after six months if held as private wealth |
Residence at a glance | Getting in: a home in Luxembourg, or a stay of more than six months. Leaving: usually a clean break once you give up your home and stop living there |
Double tax treaties | More than 85 in force |
The impatriate regime
Why do so many international hires come out ahead in Luxembourg? Because the impatriate regime takes half their salary out of income tax for years.
Image 1 — the impatriate regime takes half your salary out of tax
Since the 2025 tax year, 50% of your gross annual pay is exempt from income tax. The exemption applies to pay of up to €400,000 a year. Benefits in kind, and cash benefits that are already exempt, are left out of the calculation.
You count as an impatriate if you're recruited directly from abroad by a Luxembourg company (or a company in another EEA country) to work for it, or seconded to a Luxembourg company by a group company abroad. Temporary agency workers can't use it. All of these conditions must be met:
you're tax resident in Luxembourg, through a home or habitual stay there
in the 5 tax years before you start, you weren't tax resident in Luxembourg, didn't live within 150 km of its border, and didn't pay Luxembourg tax on work income
you earn a fixed salary of at least €75,000 a year, before benefits
the job takes at least 75% of your working time, and you don't replace someone who doesn't qualify
if you're recruited, you have in-depth specialisation in your sector; if you're seconded, you have at least five years in the group or in the sector
impatriates make up no more than 30% of your employer's workforce, unless the company is less than ten years old
The 150 km rule matters. It rules out most people moving from the Belgian, French and German border regions, however senior the job.
The exemption lasts as long as your assignment, up to the end of the eighth tax year after the year you start. Start in 2026 and it can run until the end of 2034. It stops as soon as one of the conditions is no longer met. Your employer applies it through payroll and must send the tax authority a list of impatriates by 31 January each year.
If you started under the old regime before 2025, you stay on it unless you choose the new one. That choice is irrevocable, so compare both before you switch.
It can be combined with the profit-sharing bonus, which is half exempt up to 30% of your gross annual pay.
👉 Law of 20 December 2024: the new impatriate regime and 2025 tax scale (in French)
When you become tax resident in Luxembourg
You're resident in Luxembourg if you have your tax domicile or your habitual abode there. A tax domicile means a home you keep and use. Habitual abode means living in Luxembourg other than temporarily.
There's also a fixed time test. If your stay in Luxembourg lasts longer than six months, you're fully taxable, and that liability reaches back to cover the first six months as well. The test looks at a continuous stay, not a count of days in a calendar year.
If your centre of vital interests is abroad, you're generally non-resident, whatever your registered address.
Leaving is usually a clean break. Once you give up your Luxembourg home and stop living there, you become non-resident and are taxed only on income from Luxembourg, such as a Luxembourg salary or rent from a flat there.
👉 Luxembourg tax authority (ACD): resident or non-resident (in French)
👉 Tax Adaptation Law of 1934, sections 13 and 14: domicile and the six-month rule (in German)
Income tax rates for 2026
Luxembourg taxes salaries, profits, pensions and investment income together on one progressive scale. The tax year is the calendar year. The scale below applies to tax class 1, which covers most single people under 64.
Luxembourg income tax rates for 2026 (tax class 1)
Taxable income | Rate |
|---|---|
Up to €13,230 | 0% |
€13,230 to €24,255 | 8% rising to 12% in 1% steps |
€24,255 to €54,090 | 14% rising to 38% in 2% steps |
€54,090 to €117,450 | 39% |
€117,450 to €176,160 | 40% |
€176,160 to €234,870 | 41% |
Over €234,870 | 42% |
Source: Income Tax Law art. 118, as replaced from the 2025 tax year. Each step in the 8% to 38% range covers about €2,200 to €2,300 of income.
On top of the tax, you pay a solidarity surcharge for the employment fund. It's 7% of your tax, or 9% on the part of your income above €150,000 in classes 1 and 1a (€300,000 in class 2).
Your tax class depends on your situation. Married couples and civil partners taxed jointly are in class 2, which is usually much cheaper. Single parents, widowed people and anyone who has turned 64 by the start of the year are in class 1a.
👉 ACD: income tax scale for individuals (in French)
👉 ACD: solidarity surcharge for the employment fund (in French)
👉 ACD: tax classes for residents (in French)
Worked example
You're single, recruited from the UK, and start a job in Luxembourg in 2026 on €87,000 (about US$100k).
You pay €10,049 in pension and health contributions and €1,103 in dependency insurance.
Under the impatriate regime, €43,500 of your salary is exempt. After contributions and the standard deductions, your taxable income is about €32,430 and your tax, including the 7% surcharge, is about €2,640.
Your all-in bill is about €13,790, or 16% of your salary. Without the regime, your tax would be about €18,590 and your all-in bill about €29,750, or 34%.
The regime cuts income tax only. Social security and dependency insurance are still charged on your full salary.
👉 ACD: how a net monthly salary is calculated (in French)
Freelancing in Luxembourg
Self-employed people can't use the impatriate regime. Your profit is taxed on the scale above, and you pay your own social security, both the employee and employer shares.
Contributions are based on your net profit from your tax assessment, with a minimum of the social minimum wage and a maximum of five times it. In 2026 that's about 24% of profit: 17% for pensions, 5.6% for health care, 0.5% for cash sickness benefits and a small accident insurance charge. The 1.4% dependency contribution comes on top, with no ceiling.
On US$100k (about €87,000) of profit, contributions are about €21,880 and income tax about €14,390. That's around 42% all-in, which puts Luxembourg among the most expensive countries in Europe for freelancers.
👉 Joint Social Security Centre (CCSS): the self-employed contribution base (in French)
Crypto, investments and pensions
How is crypto taxed in Luxembourg? If you hold crypto as private wealth, a gain on a sale more than six months after you bought it isn't taxed. The tax authority's guidance treats crypto like other private assets.
Selling within six months is a speculative gain, taxed at your normal rates. It's exempt if your total speculative gains for the year are under €500.
Swapping one crypto for another counts as a disposal.
Mining and frequent trading can be taxed as business profit instead.
Investments follow the same six-month rule. Gains on shares held for more than six months aren't taxed, unless you held more than 10% of the company at any time in the last five years. Gains on a sale within six months are speculative and taxed in full.
Dividends from fully taxable companies in Luxembourg, the EU or a treaty country are 50% exempt. Every resident also gets a €1,500 allowance on investment income (€3,000 for couples taxed jointly). Interest paid by a Luxembourg bank has a final 20% tax deducted at source.
Foreign pensions are generally taxed in Luxembourg on the normal scale, unless the treaty with the paying country says otherwise. If you're single and aged 65 or over, you're in class 1a, which lowers the tax. With a €34,800 pension and €17,400 of dividends, your bill is about €2,950, or 5.7%, including the dependency contribution.
Luxembourg has had no wealth tax for individuals since 2006. Inheritance tax doesn't apply to children or parents within their legal share, or to a spouse or partner registered for at least three years. Other heirs pay 6% to 15% or more.
👉 ACD circular of 26 July 2018 on virtual currencies (in French)
👉 ACD: speculative gains and gains on substantial shareholdings (in French)
👉 Guichet.lu: the 50% dividend exemption and €1,500 allowance (in French)
👉 ACD: 20% final tax on interest and 15% dividend withholding (in French)
👉 Guichet.lu: inheritance tax rates and exemptions (in French)
👉 Law of 23 December 2005: abolition of wealth tax for individuals (in French)
Social security
Employees pay 8.5% for pensions and 3.05% for health insurance (2.8% for care and 0.25% for cash benefits). Your employer pays about the same again, plus accident insurance. From 1 June 2026 these are charged on pay up to €13,856.63 a month, five times the social minimum wage.
Then there's dependency insurance, which funds long-term care. It's 1.4% of your gross pay with no ceiling, after an allowance of a quarter of the social minimum wage, €692.83 a month from June 2026. It isn't tax deductible.
If you're covered by Luxembourg's dependency insurance (in practice, its health insurance), it also reaches your pension, investment income and rent. The tax authority collects that part with your income tax.
👉 CCSS: 2026 contribution rates and social minimum wage (in French)
👉 National Pension Insurance Fund (CNAP): pension changes from 2026 (in French)
👉 ACD: dependency insurance contribution (in French)
Double tax treaties
Does Luxembourg have double tax treaties? Yes. Luxembourg has more than 85 double tax treaties in force, including with the UK, the United States, France, Germany, Belgium, the Netherlands, Ireland, Switzerland, Spain, Portugal, Italy, Singapore, the UAE, Japan, India and Canada.
👉 ACD: double tax treaties in force and under negotiation (in French)
Moving to Luxembourg without a job offer
Luxembourg doesn't have a digital nomad visa. EU, EEA and Swiss citizens can live and work there freely. Most other people need a residence permit tied to a Luxembourg job, self-employment or a specific purpose.
The closest option for someone with income from elsewhere is the permit for private reasons. You must show stable and sufficient resources of your own, measured against the social minimum wage, plus full health insurance. The official examples are income from work in another EU or Schengen country, or a pension. The permit lasts up to three years and can be renewed.
Whatever permit you hold, a stay of more than six months makes you tax resident.
👉 Guichet.lu: staying in Luxembourg for private reasons as a non-EU national (in French)
Who is Luxembourg good for?
How does Luxembourg compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on 2026 rules and the all-in cost including social security and dependency insurance.
☑️ Who is Luxembourg good for? Tax ratings for expats in 2026
Expat profile | Luxembourg rating | Why |
|---|---|---|
Employees | Good | About 16% all-in on a US$100k salary under the impatriate regime, which a specialist hired from abroad on €75,000 or more can usually claim. Without it, the same salary costs about 34%. |
Freelancers (self-employed) | Poor | About 42% all-in on US$100k of profit. You pay both shares of social security (about 24% of profit up to the ceiling), the 1.4% dependency contribution and income tax on the full scale. The impatriate regime is for employees only. |
Retirees | Good | About 5.7% on a US$40k foreign pension plus US$20k of dividends, for a single person aged 65 or over (tax class 1a), including the 1.4% dependency contribution. Children inherit tax free within their legal share, and there's no wealth tax. |
Crypto gains | Excellent | Crypto held as private wealth for more than six months is outside the tax, under official guidance from the tax authority. Gains on sales within six months are taxed at normal rates, unless your total for the year is under €500. |
Investment income | Good | Under 1% on a US$1m portfolio of shares: half of qualifying dividends is exempt, a €1,500 allowance applies, and gains on shares held over six months (holdings of 10% or less) aren't taxed. Fund distributions don't get the 50% exemption. |
Digital nomad visa | Poor | Luxembourg has no digital nomad visa. Non-EU remote workers need a work, self-employment or private-reasons permit, and the private-reasons route is built around people living on their own resources. |
Filing and deadlines
Most employees have tax deducted through payroll and may not need to file. You must file a return if, for example, your taxable income is over €100,000 with one employer, or you have more than €600 a year of income that isn't taxed at source, including income from abroad.
The return for 2026 is due by 31 December 2027, and that deadline can't be extended. The self-employed are assessed each year and pay tax in advance during the year.
👉 ACD: questions and answers for residents
Frequently asked questions
What is the impatriate regime in Luxembourg?
Since 2025, an employee recruited or seconded from abroad can have 50% of their pay, up to €400,000, exempt from income tax. You need a fixed salary of at least €75,000 and no home within 150 km of the border in the previous five years. It lasts until the end of the eighth year after you start.
How long do you need to stay to be tax resident in Luxembourg?
You're resident if you have a home in Luxembourg or live there other than temporarily. A stay of more than six months always makes you fully taxable, and the liability then covers the first six months too.
What are the income tax rates in Luxembourg for 2026?
In tax class 1, the first €13,230 is tax free. Rates then rise from 8% to 39% by €54,090, and reach 42% above €234,870. A solidarity surcharge of 7%, or 9% on income above €150,000, is added to the tax.
Is crypto taxed in Luxembourg?
Not if you hold it as private wealth for more than six months. Gains on sales within six months are taxed at normal rates unless your total speculative gains are under €500 a year. Mining and frequent trading can be taxed as business profit.
How much social security do employees pay in Luxembourg?
In 2026 employees pay 8.5% for pensions and 3.05% for health insurance, on pay up to five times the social minimum wage. A 1.4% dependency contribution is added on all pay, after a small allowance.
How many double tax treaties does Luxembourg have?
Luxembourg has more than 85 double tax treaties in force, including with the UK, the United States, France, Germany, Belgium, the Netherlands, Switzerland and Singapore.
Where to go next
👉 Best countries for crypto tax
Important information
This article is general information and does not constitute tax, legal, immigration or financial advice, and does not create a client relationship. Tax outcomes depend on travel history, income sources, treaty status and the law applying to the relevant year. Rates, thresholds and regimes change, and some measures described may be proposed rather than enacted; this article reflects our understanding as at the date of publication. Obtain advice from a suitably qualified professional before acting or refraining from action.
