Luxembourg is distinguished for its sophisticated and advantageous tax regime, which frequently offers more favorable conditions relative to other European jurisdictions. Those residing in or considering relocating to Luxembourg need to have a thorough understanding of the local tax framework. Such an understanding is critical not only for mitigating unforeseen fiscal liabilities but also for optimizing strategic financial planning, encompassing personal finance, entrepreneurial ventures, and investment portfolios.
A pivotal aspect of Luxembourg's taxation landscape is the capital gains tax, which is imposed on the profit realized from the disposal of assets, including real estate and securities. This article seeks to provide an exploration of the mechanisms of the capital gains tax in Luxembourg, elucidate the categories of taxpayers subject to this levy, and outline the methodologies for its calculation.
What is the capital gains tax?
Capital gains are the profit that a person or entity obtains by selling an asset at a higher price than was initially paid for it. Simply put, it is the positive difference between the sale price and the acquisition price of an asset. For example, if you buy a property for 100,000 euros and then sell it for 150,000 euros the capital gain would be 50,000 euros.
The taxation of these gains depends on the type of asset, the holding period, and the tax profile of the seller, whether they are a resident, non-resident, or corporate entity. In the following sections, we will cover the capital gains tax rules for different asset types, including real estate, shares or other securities, art and collectibles and cryptocurrencies.
Personal capital gains tax in Luxembourg
In many cases, capital gains are subject to the same treatment as ordinary income and are taxed at the progressive income tax rate. In some cases, taxation is based on this same progressive rate but with some adjustments and in other cases, the taxation is completely different.
Before examining capital gains taxation for the different types of assets it is then important to review how the progressive income tax rate works. Under this system, the more you earn, the higher the percentage you will pay in taxes according to a table in which taxation ranges from 0% to 45.78%.
| From EUR | To EUR | Tax rate (%) | Employment fund surcharge (%) | Effective tax rate (%) |
| 0 | 12,438 | 0 | 7 | 0.00 |
| 12,438 | 14,508 | 8 | 7 | 8.56 |
| 14,508 | 16,578 | 9 | 7 | 9.63 |
| 16,578 | 18,648 | 10 | 7 | 10.70 |
| 18,648 | 20,718 | 11 | 7 | 11.77 |
| 20,718 | 22,788 | 12 | 7 | 12.84 |
| 22,788 | 24,939 | 14 | 7 | 14.98 |
| 24,939 | 27,090 | 16 | 7 | 17.12 |
| 27,090 | 29,241 | 18 | 7 | 19.26 |
| 29,241 | 31,392 | 20 | 7 | 21.40 |
| 31,392 | 33,543 | 22 | 7 | 23.54 |
| 33,543 | 35,694 | 24 | 7 | 25.68 |
| 35,694 | 37,845 | 26 | 7 | 27.82 |
| 37,845 | 39,996 | 28 | 7 | 29.96 |
| 39,996 | 42,147 | 30 | 7 | 32.10 |
| 42,147 | 44,298 | 32 | 7 | 34.24 |
| 44,298 | 46,449 | 34 | 7 | 36.38 |
| 46,449 | 48,600 | 36 | 7 | 38.52 |
| 48,600 | 50,751 | 38 | 7 | 40.66 |
| 50,751 | 110,403 | 39 | 7 | 41.73 |
| 110,403 | 165,600 | 40 | 7 | 42.80 |
| 165,600 | 220,788 | 41 | 9 | 44.69 |
| Over 220,788 | 42 | 9 | 45.78 |
Shares or other securities
Gains derived from the sale of shares are treated differently depending on how long the asset has been held and the percentage of ownership in the company. It should also be noted that capital gains of less than 500 euros are not subject to taxation. The following table summarizes the taxation according to the different cases:
| Short-term shareholding(less than 6 months) | Long-term shareholding(more than 6 months) | |
| Minority shareholding (less than 10%) | Taxation at progressive rates plus an insurance contribution of 1.4% | Exemption |
| Majority shareholding (more than 10%) | Taxation at progressive rates plus an insurance contribution of 1.4% | Taxation at half of the global rate (max. 22.89%) plus an insurance contribution of 1.4%50,000 euros allowance (doubled for spouses/civil partners filing jointly) |
Capital Gains Tax Help
Accounting from €90. EasyBiz offers invoicing, expenses and expert online support.
Learn moreReal estate
The tax rate and the rules for calculating taxable capital gains on real estate depend on the period of detention and whether or not the property constitutes the principal residence of the declarant.
If the capital gains come from the sale of the principal residence no tax is applied, otherwise the tax liability will depend on the detention period of the property and the time at which the capital gain was obtained according to the following table:
| Holding period (years) | Profit type | Taxation | Maximum rate | Application period |
| < 2 | speculation profit | normal | 45.78 % | 2024 |
| > 2 | capital gain on the sale | ¼ overall rate | 11,45 % | 2024 |
| < 5 | speculation profit | normal | 45,78 % | from Jan 1, 2025 |
| > 5 | capital gain on the sale | ½ overall rate | 22,89 % | from Jan 1, 2025 |
In addition, it is necessary to add a contribution to the insurance contribution (1.4%) and take into account a ten-year tax allowance of 50,000 euros (100,000 euros for spouses or partners taxed jointly). This allowance should be reduced by the tax allowances that the declarant has already received during the ten-year period in which he/she owned the property.
These rules apply to both Luxembourg residents and non-residents selling property in Luxembourg and speculation gains generated from building sales located abroad are tax-exempt.
Art and collectibles
In the case of the disposal of a work of art within 6 months after its acquisition, the realized capital gain is taxed at the normal tax rate (up to 45.78%). Capital gains realized on the transfer of a work of art more than six months after its acquisition are not subject to taxation. However, capital gains realized on the sale of a work of art, realized in the course of a business activity, are to be considered as part of business income and therefore taxed at the normal tax rate.
Cryptocurrencies
In Luxembourg, income from cryptocurrency sales depends on how the filer is categorized according to three categories: investors, speculators and miners. The following persons fall into each category:
- Miners: those who carry out cryptocurrency mining activities.
- Speculators: those who carry out cryptocurrency sale operations without having held them for at least 6 months.
- Investors: those who carry out cryptocurrency sale operations after having held them for at least 6 months.
The taxation for each case is as follows:
- Speculators and miners: their activity is generally carried out through a company and their profits are taxed between 22% and 25%.
- Investors: they are exempt from taxation as the income is considered miscellaneous income, and article 99 bis of the income tax law provides that only speculative profits are taxable.
It is important to note that the taxation of cryptocurrencies can be complex due to the need for meticulous tracking of digital asset portfolios, including acquisition dates and transaction values. Additionally, this area of tax law is rapidly evolving, and regulations are subject to change. Therefore, staying informed about the latest developments is crucial for anyone actively involved in cryptocurrency trading, mining, or investment.
Corporate capital gains tax in Luxembourg
One unique aspect of corporate tax in Luxembourg is that all company income is classified as commercial income, there are no separate categories. As a result, capital gains are treated in the same way as all other forms of income that the company generates. The applicable tax rate depends on the taxable base amount, as follows:
- Taxable Base Below 175,000 Euros: A tax rate of 15% applies.
- Taxable Base Between 175,000 and 200,000 Euros: A flat amount of 26,250 euros, plus an additional 31% applied to the taxable base between 175,000 and 200,000 euros.
- Taxable Base Above 200,000 Euros: The applicable rate is 17%.
In addition, all companies based in Luxembourg must also contribute 7% of their corporate tax liability to the employment fund and are subject to the municipal business tax (MBT). The MBT varies depending on the municipality, in Luxembourg City, the municipal business tax rate is 6.75%.
Corporate taxation in Luxembourg can be highly complex, with numerous exemptions and special provisions that may apply depending on the specific circumstances of the business. For this reason, it is strongly recommended that companies seek professional tax advice to navigate the complexities of the corporate tax system effectively.
