Luxembourg: Income Tax

Luxembourg has introduced a draft law establishing a new tax framework for employee stock option plans, creating a favorable regime for qualifying young innovative companies while codifying the general tax treatment for all other stock option arrangements. The proposal aims to defer taxation until share disposal for eligible companies, potentially reducing the effective tax burden to approximately 11.45% while addressing practical liquidity constraints for employees.

Luxembourg is introducing significant changes to its stock option taxation framework, establishing a new statutory regime while codifying treatment under ordinary rules.

The Bill has two components: It introduces a targeted tax regime for stock options granted by young innovative companies (YICs) to their employees, and it separately codifies the existing tax treatment of ordinary...

On 6 January 2026, the Luxembourg government released draft law No. 8676 (the "Draft Law") introducing a single tax class for income taxation...

On 6 January 2026, the Luxembourg government moved forward with its long-awaited reform of personal income taxation via bill of law 8676...

The Luxembourg government has submitted a draft law under Bill 8676 introducing a single personal income tax class and a move to full individual taxation.

On 22 August 2025, the Luxembourg tax authorities published a new circular L.I.R. n°168quater/2 dated 12 August 2025. It provides clarifications on the interpretation of the carve-out from the reverse...

New guidance resolves key uncertainties under ATAD 2 reverse hybrid rules and provides immediate compliance roadmap for fund structures.

On 22 August 2025, the Luxembourg tax authorities ("LTA") published a new Circular (L.I.R. nº 168quater/2, dated 12 August 2025) addressing certain aspects of the Luxembourg reverse hybrid mismatch rules ("RHMR").