Luxembourg sits 182nd out of 217 in our world ranking, with a FiScore of 3.9 out of 10. The personal scale reaches nearly 46%, corporate tax is close to 24%, and VAT at 17% is the only genuinely soft figure in the table.
This is not a tax haven. It is a financial centre, and the two are not the same thing.
What Luxembourg is not
It needs saying first, because the reputation says the opposite.
For an ordinary employee, Luxembourg taxes heavily. The scale is progressive and reaches levels comparable with France's, with social contributions on top.
What made the country's fortune is engineering for structures: holding companies, investment funds, securitisation vehicles, intellectual property regimes. That is a profession, and it is not a personal relocation decision.
The impatriate regime, rebuilt in 2025
Here is the part that actually concerns someone thinking of moving.
Since 1 January 2025 the impatriate regime has been entirely redesigned. The old system, which reimbursed certain costs, was replaced by something much simpler:
50% of eligible gross annual remuneration is exempt from tax, on a base capped at EUR 400,000 a year.
| Condition | Threshold |
|---|---|
| Minimum annual base salary | EUR 75,000 excluding benefits |
| Working time in Luxembourg | at least 75% |
| Duration | the year of arrival, then eight more |
Someone arriving in 2025 therefore benefits until 2033.
Half your salary exempt, on a base of up to EUR 400,000, in a country with a heavy scale: the gap is considerable, and it explains a good part of the centre's international recruitment.
The conditions that rule people out
The EUR 75,000 threshold puts the regime beyond most positions. It is a device for executives and specialists, not for everyone.
The 75% working time in Luxembourg excludes highly mobile arrangements, and assumes a real, documented presence.
It is not a regime for the self-employed or for people living off capital. It targets the impatriate employee, recruited or seconded.
If you are American
Both this section and the next matter more here than almost anywhere, because Luxembourg's fund sector recruits heavily from both countries.
Citizenship-based taxation continues whatever Luxembourg does. Luxembourg tax paid generates foreign tax credit, and the impatriate exemption cuts that credit exactly where it cuts the Luxembourg bill. A lower local liability can therefore mean a higher United States one, and the regime is worth considerably less to a US citizen than the headline suggests.
That arithmetic is specific enough to your numbers that it deserves a specialist before you sign anything.
If you are British
The statutory residence test decides, not your employment contract, and the double tax treaty settles what is left. Read leaving the UK first.
The drawbacks
Housing is in crisis. Prices in Luxembourg City are among the highest in Europe, and a large share of employees live in France, Belgium or Germany and cross the border every day.
That border is precisely the trap: a cross-border worker stays tax resident where they live, with rules on days worked abroad that generate regular disputes. It also puts the 75% working time condition at risk.
The country is small, and its social life has a reputation for being closed to those outside the relevant professional circles.
So, who is Luxembourg for?
- An executive or specialist recruited above EUR 75,000: the impatriate regime is one of the most generous in Europe, and nine years is a long time.
- A holding structure or a fund: that is the centre's trade, and it belongs with specialist advice rather than in a relocation decision.
- An employee below the threshold: no benefit, and a heavy tax burden.
- Self-employed, or living off capital: look elsewhere, at Ireland or Cyprus depending on your situation.
The full table of Luxembourg rates is on our Luxembourg page, and the comparison tool puts it next to anywhere else. Before deciding anything, read how to actually leave.
Sources
The Luxembourg Administration des contributions directes, guichet.lu and PwC Tax Summaries, verified in August 2026. An error reported to us gets fixed.
This page informs, it does not advise. Before deciding anything, talk to a professional who will look at your situation, as our terms of use set out.