Inheritance tax and inheritance law in Luxembourg
March 24, 2016
Estate Tax (Succession and Death Duties)
Inheritance is subject to inheritance tax. It is taxed at the net value, deducting all liabilities and allowances. Rates vary depending on the relationship between the deceased and the heir.
INHERITANCE TAX RATES
|Between Spouses with Children||exempt|
|Between Spouses without Children||5%|
|Between Brothers and Sisters||6%|
|Between Uncle/Aunt and Nephew/Niece||9%|
|Between Grand-uncle/Grand-aunt and
|Source: Global Property Guide|
The inheritance of direct descendants and ascendants are exempt from succession duties, up to the legal limitation. The inheritance of a spouse having common children with the deceased is also exempt from tax. Any inheritance whose net worth is less than €1,250 is exempt from taxation.
The inheritance is further subject to progressive rates depending on its value. The tax amount based from the preceding computation (taxable inheritance multiplied by a rate according to the degree of relationship) is further multiplied by a rate according to the value of the inheritance. The final amount is then the final tax liability of the heirs.
Surtax Depending on the Value of Inheritance
|VALUE OF THE SHARE (€)||INCREASE IN THE RATE (€)|
|€10,000 – €20,000||10%|
|€20,000 – €30,000||20%|
|€30,000 – €40,000||30%|
|€40,000 – €50,000||40%|
|€50,000 – €75,000||50%|
|€75,000 – €100,000||60%|
|€100,000 – €150,000||70%|
|€150,000 – €200,000||80%|
|€200,000 – €250,000||90%|
|€250,000 – €380,000||120%|
|€380,000 – €500,000||130%|
|€500,000 – €620,000||140%|
|€620,000 – €750,000||150%|
|€750,000 – €870,000||160%|
|€870,000 – €1,000,000||170%|
|€1,000,000 – €1,250,000||180%|
|€1,250,000 – €1,500,000||190%|
|€1,500,000 – €1,750,000||200%|
Gift taxes (registration duties) are levied in Luxembourg for all gifts made in writing or that requires registration. Gifts of immovable property are required to be registered. The rates vary depending on the relationship between the donor and the beneficiary.
|CLASSIFICATION OF GIFT||TAX RATE|
|Recoverable gifts in direct line||1.8%|
|Non-recoverable gifts in direct line||2.4%|
|Gifts between spouses||4.8%|
|Between brothers and sisters||6%|
|Between uncle/aunt and nephew/niece||8.4%|
|Between great-uncle/-aunt and great-nephew/-niece||9.6%|
|Between unrelated individuals||14.4%|
Gifts between spouses, brothers and sisters, uncle/aunt and nephew/niece, great-uncle/-aunt and great-nephew/-niece, and between unrelated individuals may be taxed at reduced rates if it is made in a pre-nuptial agreement.
Real estate gift transfers are also subject to a 1% transcription duty (droit de transcription).