Specific taxes in Luxembourg in 2026: VAT, property duties and inheritance

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You already know Luxembourg's income tax brackets, or you will soon. Your real bill also includes VAT, property duties, surcharges, withholding taxes and inheritance rules. After this guide you will know each one for 2026, who pays it and where the legal savings are.

Luxembourg specific taxes in 2026: the key figures

What changed for 2026

• Bëllegen Akt fixed at EUR 40,000. The AED tax portal says a law of 3 July 2025 set it at EUR 40,000 per buyer. No end date is given. Earlier, EUR 40,000 was a temporary amount.
• Crypto reporting. A law of 27 March 2026 transposes Directive (EU) 2023/2226 (DAC8). Crypto-asset service providers now report users' transactions for automatic exchange.
• Savings interest. A law of 19 December 2025 amended the savings-interest withholding law. The ACD page, updated August 2026, still shows the 20% final rate.
• Property tax. Communes published their 2026 property tax rates in January 2026. A national reform with a new land valuation model is still announced, not in force.

Is this guide for you?

Read on if you…

• are moving to Luxembourg and want the full picture beyond income tax;
• plan to buy a home or an investment flat there;
• start a freelance business and wonder whether you must charge VAT.

Probably not your case if you…

• only need the residence tests (see tax residency in Luxembourg);
• run a company and need corporate rates (see legal forms of business in Luxembourg).

How does VAT work in Luxembourg in 2026?

Luxembourg has four VAT rates, listed by the AED's indirect tax portal. The standard rate is 17%. Goods and services in annex A of the VAT law use 8%, annex B uses 3% and annex C uses 14%. Everything else is at 17%.

Do you have to register as a freelancer?

Not always. Since 1 January 2025 the domestic franchise (small-business exemption) applies up to EUR 50,000 of annual turnover. Under the franchise you don't charge VAT to your clients.

Here's the catch. If you pass EUR 50,000 but stay within the 10% tolerance (EUR 55,000), you keep the franchise until year end. You lose it for the following calendar year, as the AED's SME page explains. Above EUR 55,000, ask the AED at once how your current-year sales are treated.

Selling to other EU countries

A separate cross-border scheme lets small businesses use exemptions in other EU states. Your total EU turnover must not exceed EUR 100,000. It starts once the AED issues your individual identification number.

The 3% rate on your own home

Building or renovating a home you live in as your main residence can be charged at 3% instead of 17%. For mixed-use buildings, the living area must exceed three quarters of the total surface. Otherwise the benefit is proportional. The AED caps the total benefit, so ask for the current ceiling before you sign.

How much tax do you pay when you buy property in Luxembourg?

Buying property is the biggest one-off tax most residents ever pay. The AED tariff page sets the registration duty at 5% plus a 2/10 surcharge, so 6% in practice.

1. Registration duty: 6% of the price. The AED (Administration de l'enregistrement, des domaines et de la TVA, the registration and VAT authority) collects it.
2. Transcription duty: 1% for recording the deed in the mortgage register. Total: 7%.
3. Luxembourg City surtax: the capital adds a tax equal to 50% of the registration duty. On a standard sale that is 3 more points, so 10%. Some transfers are exempt.
4. Buying to resell: the registration duty rises to 7.2%.

The Bëllegen Akt credit below offsets registration and transcription duties; the AED doesn't list the city surtax among them.

The Bëllegen Akt credit

Bëllegen Akt is a tax credit against registration and transcription duties on a notarial deed. The AED says the law of 3 July 2025 fixes it at EUR 40,000 per buyer. A couple buying together can therefore offset up to EUR 80,000.

The conditions are strict:

• The home must be your main, personal and effective residence.
• You must move in within 2 years of the deed, or 4 years for a plot or a building under construction.
• You must live there for at least 2 years without interruption.
• Renting it out, even partly, or selling it within those 2 years triggers repayment of the full credit, with interest.

The annual property tax

The impôt foncier (property tax) equals a tax base times a communal rate. The base still rests on 1941 rental values, indexed. Each commune sets its rate every year. Payment dates depend on the amount, from one to four instalments.

How are your savings and investments taxed at source?

Interest: the 20% final tax

Interest paid by a Luxembourg paying agent to a resident individual suffers a 20% final withholding tax. The ACD page on savings taxation confirms it settles your tax for good. Business income is the exception.

Good news: you can opt for the same 20% on interest paid by banks in another EU or EEA state. You use form 931 and declare by 31 December of the following year. On sight savings and term deposits, a Luxembourg bank only withholds when interest exceeds EUR 250 per taxpayer and paying agent (Guichet.lu); the ACD treats such small savings as exempt.

Dividends: 15% withheld, half exempt

Luxembourg companies withhold 15% on gross dividends. As a resident, 50% of dividends from fully taxable companies in Luxembourg, the EU or a treaty country is exempt. You also get a EUR 1,500 annual allowance on investment income, doubled for jointly taxed couples. Withholding is generally credited against your final tax.

The surcharges you forget

Two charges sit on top of income tax:

• Employment fund surcharge (contribution au fonds pour l'emploi, often called the solidarity surcharge): 7% of your income tax, per the ACD. It rises to 9% above EUR 150,000 of taxable income in classes 1 and 1a. In class 2 the threshold is EUR 300,000.
• Dependency contribution: 1.4% for long-term care. The ACD collects it on investment income and some pensions, after an allowance set by regulation.

Individuals pay no wealth tax: it was abolished with effect from 1 January 2006. It still applies to companies.

For gains on shares, crypto or property, see our guide to capital gains tax in Luxembourg.

What about inheritance and gifts?

Inheritance

When the deceased lived in Luxembourg, the AED inheritance exemptions are generous:

• Children and parents: exempt on their legal share. Above it, 2.5% or 5% applies.
• Spouses: exempt.
• Registered partners: exempt if the partnership was registered more than three years before the death.
• Siblings: 6% on the legal share, 15% beyond.
• Unrelated heirs: 15%.

Here's the catch: those base rates rise once a heir's net share exceeds EUR 10,000. The multiplier climbs to 22/10 above EUR 1,750,000. When the deceased lived abroad, only Luxembourg real estate is taxed, through a transfer duty. Bank accounts in Luxembourg are not.

Gifts

A notarised gift pays registration duty, per the AED tariff. In direct line the rate is 1.8%, or 2.4% with a dispensation from reporting (dispense de rapport). Spouses and partners registered for more than three years pay 4.8%, siblings 6%, uncles, aunts, nephews and nieces 8.4%, and unrelated people 14.4%.

Common mistakes (and what they cost)

• Renting out the flat bought with the Bëllegen Akt credit within 2 years → you repay the credit, up to EUR 40,000 per buyer, with interest.
• Moving in after the 2-year deadline → the credit is lost for that purchase.
• Ignoring the VAT franchise threshold → a year above EUR 50,000 means charging 17% VAT from the next 1 January, a cost private clients cannot recover.
• Declaring EU bank interest at progressive rates → paying up to 45.78% instead of opting for the 20% final tax.
• Assuming partners inherit tax-free → a partnership registered for under three years exposes the survivor to rates of 15% or more.

Frequently asked questions

Does Luxembourg have a wealth tax for individuals?

No. Luxembourg abolished the net wealth tax for individuals with effect from 1 January 2006. It still applies to companies. If you hold shares, funds or property personally, you pay nothing on their value. You pay tax only on the income they produce and, in some cases, on gains when you sell.

How much are property purchase taxes in Luxembourg in 2026?

You pay 6% registration duty plus 1% transcription duty, so 7% of the price. In Luxembourg City, a surtax equal to half the registration duty brings the total to 10%, unless an exemption applies. For a main home, each buyer can offset up to EUR 40,000 of registration and transcription duties.

What is the VAT threshold for freelancers in Luxembourg?

Since 1 January 2025 the domestic small-business exemption covers annual turnover up to EUR 50,000. You can exceed it by up to 10% and keep the exemption until year end. From the next year you must charge VAT, normally at 17%. Above EUR 55,000, check with the AED straight away.

Is interest from a Luxembourg bank taxed?

Yes. Luxembourg paying agents withhold a 20% final tax on interest paid to resident individuals. You do not report that interest again. You can opt to pay the same 20% on interest from EU or EEA banks, using form 931. On sight savings and term deposits, nothing is withheld until interest exceeds EUR 250 per bank.

Do children pay inheritance tax in Luxembourg?

Not on their legal share when the deceased was a Luxembourg resident. Anything received above the legal share is taxed at 2.5% or 5%. Spouses are fully exempt. Siblings pay 6% on their legal share and 15% beyond, before progressive multipliers that apply once a share exceeds EUR 10,000.

What does Luxembourg City add to property duties?

Luxembourg City levies a surtax equal to 50% of the registration duty on property transfers within its territory, with some exemptions. On a standard 6% registration duty, that adds 3 points. With the 1% transcription duty, a purchase in the capital costs 10%. The Bëllegen Akt credit offsets only the 7% state duties.

Related guides

• Capital gains tax in Luxembourg: shares, crypto and property
• Personal tax deductions and benefits in Luxembourg
• How Luxembourg taxes crypto-assets
• Luxembourg tax landscape overview
• Specific taxes in Malta, for comparison
• Specific taxes in Austria, for comparison
• All country tax guides

Sources

• VAT rates – AED indirect tax portal
• SME VAT franchise scheme – AED indirect tax portal
• Registration duty tariff – AED indirect tax portal
• Bëllegen Akt tax credit – AED indirect tax portal
• Tax credit on notarial deeds – Guichet.lu
• Savings interest final withholding – ACD
• Inheritance tax tariff – AED indirect tax portal
• Employment fund surcharge – ACD

This guide is general information, not personalised tax advice. See how we research and review.