Luxembourg

{"ftc_utility":"high","fbar_trigger_notes":"Luxembourg requires residents to maintain local bank accounts for salary payments and daily transactions. Accounts at Luxembourg banks (including BGL BNP Paribas, Banque de Luxembourg, ING Luxembourg, Spuerkeess) almost certainly exceed the USD 10,000 FBAR threshold given Luxembourg's high cost of living and salary levels. FBAR filing on FinCEN Form 114 is required. FATCA compliance is well established in Luxembourg - Luxembourg financial institutions report US account holder information under the IGA signed in 2014.","ftc_utility_reason":"Luxembourg's top marginal rate of 42% (plus solidarity surtax of up to 9% on the income tax amount for high earners) exceeds US federal rates. The FTC almost always fully offsets US tax liability on Luxembourg-source earned income for US residents. Most US expats in Luxembourg use the FTC rather than FEIE to avoid the FEIE interaction with the stacking rules on passive income.","presence_day_count_notes":"Luxembourg has no strict cap on physical presence for residency but the 183-day rule triggers tax residency. Most US expats in Luxembourg obtain residency status, making bona fide residence the more practical FEIE qualification method. The 330-day physical presence test is technically available but Luxembourg's residency-based system and high-tax environment means most expats claim the FTC rather than FEIE.","typical_qualifying_method":"bona_fide_residence","housing_exclusion_available":true,"physical_presence_test_applies":true,"estimated_housing_exclusion_usd":35000,"local_tax_rate_on_earned_income":0.42,"bona_fide_residence_test_applies":true}

{"pension_income":{"notes":"Pension income received by Luxembourg residents is taxed at progressive rates up to 42% plus the solidarity surtax. Luxembourg state pensions and private pensions are both subject to income tax. A 50% exemption applies to the lump-sum pension capital paid by certain occupational pension schemes. Foreign pension income is also taxable in Luxembourg for residents, subject to treaty provisions.","tax_rate":null,"locally_taxed":true},"social_security":{"notes":"Under Article 19 of the US-Luxembourg tax treaty, US Social Security benefits paid to a Luxembourg resident are taxable only in the US. Luxembourg does not tax US Social Security benefits received by residents. The US-Luxembourg totalization agreement (1993) also governs social security contribution obligations.","locally_taxed":false,"treaty_protection":true},"roth_distributions":{"notes":"Luxembourg does not have a direct equivalent of the Roth IRA and does not formally recognize the US tax-exempt treatment of Roth accounts. Distributions may be taxed as pension or foreign-source income in Luxembourg, though the treaty may provide some relief. US expats should seek specific advice on Roth treatment under Luxembourg domestic law. The after-tax nature of Roth contributions may reduce the taxable portion in practice.","locally_taxed":true},"us_401k_ira_distributions":{"notes":"The US-Luxembourg tax treaty (1996, updated by 2009 protocol) covers pension income. Under Article 18, pensions and other similar remuneration paid to a resident of Luxembourg in consideration of past employment are taxable only in Luxembourg if the recipient is a Luxembourg resident. Distributions from US 401(k) and IRA accounts are treated as pension income and taxed in Luxembourg at progressive rates. The treaty prevents double taxation - Luxembourg residents do not owe US tax on these distributions beyond any US withholding, which is creditable in Luxembourg. Effective rate depends on total Luxembourg taxable income.","tax_rate":null,"locally_taxed":true,"treaty_protection":true}}

{"rate":0.42,"notes":"Capital gains on assets held less than 6 months are taxed as ordinary income at progressive rates up to 42%. Gains on assets held more than 6 months are taxed at half the ordinary rate (demi-global rate), with a EUR 500 annual exemption. Gains on a principal residence are generally exempt.","details":{"tax_type":"Capital Gains Tax","country_name":"Luxembourg","country_iso_code":"LUX","source_references":["PwC Luxembourg Tax Summaries","Administration des contributions directes Luxembourg"],"last_verified_date":"2026-06-03","general_description":"Luxembourg taxes capital gains differently depending on the holding period. Short-term gains (assets held under 6 months) are added to ordinary income and taxed at progressive rates up to 42%. Long-term gains (held over 6 months) are taxed at half the taxpayer's applicable average rate, effectively reducing the maximum rate to around 21%. Gains on disposal of a principal residence are exempt. Gains on substantial participations (more than 10% stake) held over 6 months also benefit from the half-rate rule. A solidarity surtax of 9% on the income tax due applies for single taxpayers with income above EUR 150,000.","corporate_capital_gains":{"rate":0.1745,"tax_treatment":"Corporate capital gains are included in taxable income and subject to the standard corporate income tax rate of 17%, plus the 7% solidarity surcharge on CIT and the 6.75% municipal business tax (Luxembourg City rate), giving an aggregate rate of approximately 24.94% for Luxembourg City. Participation exemption may apply to qualifying shareholdings, providing full exemption on qualifying gains."},"individual_capital_gains":{"rate":0.42,"tax_treatment":"Short-term gains (under 6 months) taxed as ordinary income at progressive rates up to 42%. Long-term gains (over 6 months) taxed at half the taxpayer's average rate, approximately 21% maximum effective rate. EUR 500 annual exemption applies to speculative gains. Principal residence gains are exempt. A 9% solidarity surtax applies to high earners.","long_term_rate":0.21,"short_term_rate":0.42,"holding_period_threshold_months":6}}}

{"notes":"Luxembourg levies a 15% withholding tax on dividends paid to resident individuals. Recipients include 50% of gross dividends in taxable income (50% exemption rule) and pay progressive income tax on that amount, with the 15% WHT creditable against the income tax liability. Non-residents are subject to 15% WHT, which may be reduced under applicable tax treaties.","rates":[{"rate":0.15,"type":"withholding","notes":"Standard 15% withholding tax on dividends. Resident individuals may credit this against income tax; 50% of dividend income is exempt from personal income tax under the 50% participation exemption for individuals."},{"rate":0,"type":"exempt","notes":"Dividends qualifying under the participation exemption at the corporate level are fully exempt if the recipient holds at least 10% (or EUR 1.2 million acquisition cost) for at least 12 months."}]}