Luxembourg 2025 Draft Budget – Introduction
On 9 October 2024, Luxembourg’s government introduced its 2025 draft Budget law (number 8444) to the Luxembourg Parliament, referred to as the Draft Law.
This Budget aims to make Luxembourg’s economy more competitive, strengthen its financial centre, and improve the purchasing power of households.
In this article, we explore the key tax changes proposed in the Budget and what they mean for individuals and businesses.
Key Tax Changes in Luxembourg’s 2025 Budget
Reduction of Registration and Transcription Duties on Real Estate
The Luxembourg government proposes a reduction in the taxable base for registration and transcription duties on real estate transactions. This change is aimed at boosting the housing market. Here’s how it works:
To qualify for this reduction, the property must:
- Be rented as housing under the rules set by the amended law of 22 May 2024, or
- Be used as the main residence of the buyer according to the amended law of 30 July 2002.
For those buying real estate between 1 October 2024 and when the Draft Law officially comes into force, a written request for a recalculation of duties must be submitted to the relevant authorities.
The reduction applies between 1 October 2024 and 30 June 2025.
Increase of the CO₂ Tax Credit
In line with Luxembourg’s environmental goals, the Draft Law includes an increase of €24 to the CO₂ tax credit, bringing it to €192 starting from 1 January 2025.
This tax credit is designed to offset the impact of the CO₂ tax on individuals with low or moderate incomes, aligning with Luxembourg’s environmental commitment while supporting household finances.
Additional Measures in the 2025 Budget
The Draft Law also references additional measures initially proposed in draft law number 8414, dated 17 July 2024, which include:
- Adjustments to personal income tax rates,
- Modifications to the corporate income tax rate, and
- An exemption from the subscription tax for exchange-traded funds (ETFs).
These additional measures are designed to complement Luxembourg’s broader fiscal goals, aiming to foster economic growth and maintain Luxembourg’s competitive edge as a financial centre.
Luxembourg 2025 Draft Budget – Conclusion
Luxembourg’s 2025 Budget brings forward several significant tax changes with the potential to benefit both the real estate market and individuals.
The reduction in real estate duties is expected to encourage housing investment, while the increased CO₂ tax credit aims to make environmentally friendly policies more affordable for lower- to middle-income residents.
Together with the personal and corporate income tax changes, these adjustments reflect Luxembourg’s commitment to economic resilience and sustainability.
Final Thoughts
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