Luxembourg

Luxembourg is a high-income EU Member State and Schengen country, widely known as a cross-border structuring hub with strong financial services infrastructure and a predictable legal environment.

Personal income tax is progressive with meaningful brackets, and Luxembourg levies net wealth tax on most Luxembourg-situs assets. For corporations, Luxembourg's IP regime (Article 50ter) provides an 80% exemption on eligible net income and certain gains from qualifying IP assets, producing an effective aggregate tax rate of approximately 4.774% on qualifying net IP income in Luxembourg City for tax year 2025.

Luxembourg offers EU free movement for EU/EEA/Swiss nationals. Third-country nationals historically had access to an investor residence permit route with multiple investment thresholds (from EUR 500K in a Luxembourg business to EUR 20.0M deposits), but draft law 8586 explicitly proposes abolition of the investor permit, steering future investors toward self-employed residence routes instead.

In practice, Luxembourg is most compelling for IP-heavy businesses seeking a low effective rate on qualifying income within an EU framework, paired with substance and nexus requirements that align with BEPS standards. For individuals, the jurisdiction is high-tax unless structured around the corporate IP regime or other incentives.