Luxembourg

Individual income tax is levied on the worldwide income of individuals residing in Luxembourg, as well as on Luxembourg-source income of non-residents.

Personal income tax rates

Luxembourg income tax liability is based on the individual's personal situation (e.g. family status). For this purpose, individuals are granted a tax class. Three tax classes have been defined:

• Class 1 for single persons.
• Class 2 for married persons as well as civil partners (under certain conditions).
• Class 1a for single persons with children as well as single taxpayers aged at least 65 on 1 January of the tax year.

The Luxembourg government is currently considering the introduction of a single tax class or a unified tax scale in the coming years, which would replace the existing three tax class (tax classes 1,1a and 2).

Married non-resident taxpayers who are not separated are granted tax class 1. However, subject to some conditions, they can request to be treated as Luxembourg tax resident to obtain the application of the tax class 2 (generally, the tax class for resident unseparated spouses). The application of tax class 2 leads to a combined assessment.

Non-resident taxpayers may request joint taxation under tax class 2 (i.e. as for married resident taxpayers), provided that at least one of the following conditions is met:

• 90% of the worldwide income of one spouse is taxable in Luxembourg. When assessing whether this is the case, the first 50 days that are not taxable in Luxembourg according to a double tax treaty (DTT) are fictively treated as income taxable in Luxembourg.
• The income of one taxpayer taxable outside Luxembourg does not exceed EUR 13,000.
• For Belgian residents, the rules are less restrictive. Only 50% of the household’s professional income need to be taxable in Luxembourg.

This option can be requested either via payroll or via the filing of an individual tax return. Non-resident married taxpayers have to report their non-Luxembourg-sourced income (for example, the spouse’s professional income). In principle, non-Luxembourg-sourced income will be exempted for Luxembourg tax purposes but will be taken into account when determining the applicable tax rate for the Luxembourg-sourced income ('exemption with progression').

In practice, married non-resident taxpayers with extensive income derived from outside Luxembourg will be adversely affected by this provision, as it will increase their effective tax rate in Luxembourg.

Tax is calculated in accordance with a progressive table, ranging from currently 8% on taxable income in excess of EUR 13,230 to 42% on income in excess of EUR 234,870.

To mitigate the impact of inflation, the personal income tax scale will be modified by adding 2.5 index brackets starting from 2025. This change builds on the previous neutralization of 4 index brackets that occurs in 2024 resulting in a substantial reduction of the tax burden for all households, particularly for those with lower income.

See the below tax brackets for the tax scale that has been adapted as of 2025:

A solidarity tax of 7% of taxes (9% for taxpayers earning more than EUR 150,000 in tax class 1 and 1a or more than EUR 300,000 in tax class 2) must also be paid.