Luxembourg’s Ministry of Finance has announced that the Chamber of Deputies approved Bill No. 8414, also known as the “Entlaaschtungs-Pak.” Tax Relief Package on 11 December 2024.

Finance Minister Gilles Roth welcomed the vote, stating: “We promised less taxes and more purchasing power for everyone, and we kept our word.

The ‘Entlaaschtungs-Pak’ also sends strong signals to businesses and our financial sector. Together, we will succeed in building a better future for our country and offering more prosperity to our citizens.”

Presented by the government on 17 July 2024, this fiscal package now includes 17 measures aimed at increasing household purchasing power, strengthening the competitiveness of the Luxembourg economy, and enhancing the attractiveness of its financial sector.

The fiscal package means lower taxes for everyone, particularly for low-income earners, through an adjustment of the income tax brackets by 2.5 index points starting 1 January 2025, following an earlier adjustment of 4 index points on 1 January 2024.

It also focuses on single-parent families. For annual gross salaries up to EUR 52,400, these households will no longer pay income taxes for the 2025 tax year.

The bill also introduces a tax exemption for the unqualified social minimum wage as of 1 January 2025, for all tax brackets – a first in Luxembourg’s history.

Thanks to the fiscal package, various specific regimes supporting talents and highly specialised profiles will be made more attractive for employees. These include the participation bonus and the expatriate regime.

The bill also proposes the introduction of a new youth employee bonus and a tax credit for overtime for cross-border workers.

To encourage companies to hire more unemployed individuals, the tax bonus for this will be extended until the end of 2026.

The corporate income tax rate will be reduced by one percentage point, and actively managed ETFs will be exempt from subscription tax starting in 2025.

Other measures in the bill include adjustments to the rule on limiting borrowing costs and the legal regime for family wealth management companies as an anti-abuse measure.