Luxembourg

Coalition Agreement tax measures as from 2024

The new government formed after the election held on 8 October 2023 revealed its programme for the next five years in a coalition agreement (the ’coalition agreement‘) signed on 16 November 2023.

Main tax measures announced for individuals are as follows:

Housing-related measures

A series of tax measures should be introduced to stimulate the construction market in the short term. This will notably include:

• An increase of the accelerated amortisation rate for housing built in view of their rental as well as an increase of the duration of the amortisation period (with a cap). 
• A reduction of the tax rate for capital gains triggered upon the sale of real estate.
• The introduction of a new tax credit for investments in rental housing by individuals.

• An increase of the tax credit for the acquisition of the primary residence.

• An increase of the tax deductibility of interest charges for owner-occupied housing.

In addition to these short-term tax measures, the new government wants to pursue a reform of the real estate tax, the introduction of a national tax on vacant housing, and the mobilisation of land in order to increase the supply and the affordability of housing. The coalition agreement further promotes the creation of tax incentives for companies to create and provide housing for their employees.

Adjustments to personal income tax (PIT) brackets

For employees, the PIT brackets will be adjusted by an equivalent of 4 index tranches starting from 2024, leading to a reduction of PIT as of 1 January 2024 (see the Taxes on personal income section).

Other measures

To increase Luxembourg’s attractiveness and to favour the recruitment and retention of talents, the new government also plans to review the profit-sharing premium remuneration mechanism and the inpatriate tax regime. It will make any adjustments that may be considered necessary. In addition, the new government plans to review the tax treatment of benefits in kind to clarify and simplify it.