Luxembourg Inheritance & Gift Tax Guide 2026

Overview — Inheritance and Gift Tax in Luxembourg

Luxembourg imposes inheritance tax (droits de succession) and gift tax (droits de donation) on the transfer of assets at death or by inter vivos gift. The tax is administered by the Administration de l'Enregistrement, des Domaines et de la TVA (AED). The rates vary significantly depending on the relationship between the deceased/donor and the beneficiary. The system is designed to favour transfers within the immediate family, with spouses and children enjoying a full exemption.

Inheritance Tax — Rates by Relationship

Inheritance tax rates depend on the relationship to the deceased:

• Spouses and civil partners: 0% (fully exempt)
• Lineal descendants (children, grandchildren): 0% (fully exempt)
• Lineal ascendants (parents, grandparents): 0% (fully exempt)
• Siblings (brothers, sisters): 6% to 12% sliding scale (EUR 100,000 tax-free allowance)
• Uncles, aunts, nephews, nieces: 15% to 24% sliding scale
• Other relatives (cousins, in-laws): 24% to 36% sliding scale
• Unrelated persons: 15% to 48% (stepped scale based on value)

Inheritance Tax Exemptions and Allowances

• Spouses/civil partners: Full exemption — no inheritance tax on any amount
• Children: Full exemption — no inheritance tax on any amount
• Siblings: EUR 100,000 tax-free allowance per sibling
• Charitable bequests: Fully exempt if made to qualifying Luxembourg charities
• Life insurance: Payouts to named beneficiaries are generally exempt from inheritance tax
• Business succession: Specific relief for the transfer of family businesses (conditions apply)

Gift Tax (Droits de Donation)

Inter vivos gifts are subject to gift tax, with rates depending on the relationship:

• Direct line (parents to children, between spouses): 0% (fully exempt)
• Between siblings: 6% to 12% sliding scale
• Between other relatives: 15% to 36% depending on degree of relationship
• Between unrelated persons: 15% to 48% sliding scale
• Annual gift allowance: Gifts up to EUR 12,000 per person per year are exempt from gift tax (for non-direct-line gifts)

Gifts of real estate and gifts made by notarial deed (acte notarié) are subject to gift tax. Certain movable gifts (cash, securities) made by private deed may be exempt if properly structured.

Inheritance Procedures and Costs

Settling an estate in Luxembourg involves the following:

• Notarial fees: The notary charges fees for preparing the certificate of inheritance (acte de notoriété) and the deed of partition (acte de partage). Fees are typically 1%–2% of the estate value.
• Court costs: If the estate goes through the succession court, court fees apply.
• Land registration: Transfer of real estate requires registration with the Land Registry (fees of 0.5%–1% of property value).
• Inheritance tax declaration: An inheritance tax return must be filed with the AED within 6 months of death (for estates with taxable assets).

Cross-Border Inheritance Issues

For international families, the following considerations apply:

• EU Succession Regulation (Brussels IV): The applicable law is generally the law of the deceased's habitual residence at the time of death, unless the deceased elected the law of their nationality.
• Luxembourg residents inheriting foreign assets: Inheritance tax may be due in Luxembourg on worldwide assets. Foreign inheritance taxes may be credited against Luxembourg tax under certain treaties.
• Non-residents inheriting Luxembourg assets: Luxembourg real estate and business assets are subject to Luxembourg inheritance tax regardless of the beneficiary's residence.

FAQs

Is there really no inheritance tax for my children in Luxembourg?

Yes, Luxembourg imposes 0% inheritance tax on transfers to children (lineal descendants) and between spouses. This applies regardless of the amount inherited. There is no upper limit on the exemption.

Can I give money to my children tax-free?

Yes, gifts from parents to children (direct line) are exempt from gift tax in Luxembourg. There is no annual limit on the exempt amount for direct-line gifts. However, if the gift is made by notarial deed, registration fees may apply.

How does inheritance tax work for non-residents who own Luxembourg real estate?

Non-residents who own Luxembourg real estate are subject to Luxembourg inheritance tax on the Luxembourg property. The rates depend on the relationship between the deceased and the heir, following the same scale as for residents.

Disclaimer

This guide provides general information about Luxembourg inheritance and gift taxation for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Luxembourg tax advisor (conseil fiscal) or the AED directly for advice specific to your situation. InvestmentKit does not provide tax advice.