EXPAT REGIME
A strategic measure for international firms relocating staff or expanding operations in Luxembourg.
Luxembourg has introduced a new expat regime (impatriate tax regime) designed to make cross-border mobility easier for firms and highly qualified professionals. The regime offers a 50% income tax exemption on Luxembourg-source salary for up to 8 years. For companies, the regime supports their efforts to attract new talent to Luxembourg and retain internationally mobile employees.
Core Benefits
50% exemption on gross Luxembourg-source salary
Cap: up to €400,000 per annum → Max €200,000 tax-free annually
Duration: 8 years (subject to conditions)
Simplified
Simplified compliance: no relocation cost tracking
Who Qualifies?
Eligible employees include:
- New tax residents in Luxembourg
- Staff seconded from a foreign company to a Luxembourg group entity
- Employees directly hired abroad by a Luxembourg or EEA company
Restriction: Employee can not have been a tax resident in Luxembourg, or lived within 150km of its borders, in the last 5 years.
Eligibility Conditions
- Minimum salary: €75,000 (excluding benefits)
- At least 75% of working time in eligible activity
- Proven specialised skills (for direct hires abroad), or 5 years’ experience (for secondments)
- Valid secondment or hiring documentation
- ≤30% of workforce can benefit (exception: companies <10 years old)
Employer Obligations
- Annual declaration: nominative list of beneficiaries submitted via MyGuichet.lu
- Deadline: 31 January each year (for the previous tax year)
- Form: official template from the tax authority (ACD)
Transitional Clause
Employees under the old regime may opt in to the 2025 regime. This choice is once-only and irrevocable, declared by the employer annually.
WHY IT MATTERS – for employees
- Higher net pay.
- Easier relocation decision: improves affordability (housing/cost of living).
- Clarity & predictability: clear caps/conditions make it easier to plan compensation and career moves.
WHY IT MATTERS – for employers
- Stronger hiring power vs. other hubs: helps Luxembourg employers compete for scarce, highly qualified profiles.
- Retention tool with a long runway: supports stability for key roles.
- Controlled, targeted measure: eligibility rules + caps + annual reporting make it a structured incentive.