Inheritance tax in Luxembourg

Luxembourg's inheritance tax law and inheritance tax rates

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Learn the ins and outs of inheritance tax in Luxembourg, including inheritance tax rates and forced heirship.

If you are an expat who has settled in Luxembourg, you will need to understand the law of succession and issues around inheritance tax in Luxembourg. Will you need to have any assets you own in Luxembourg covered by a Luxembourgian will? Discover how to fnd law firms in Luxembourg. Which laws apply to foreigners and are there rules on statutory heirship restricting who you can leave assets to?

This guide explains inheritance law and inheritance tax in Luxembourg including:

 

Inheritance law in Luxembourg

Inheritance law in Luxembourg derives from the country's Civil Code. Recent changes to EU legislation state that the laws of the deceased's principle country of residence will apply when determining how their estate is handled – including assets overseas. However, foreign residents can opt to have their estate handled according to the laws of their home country instead – see below section for more details.

Forced heirship

In Luxembourgian inheritance law, 'forced heirship' applies meaning that certain relatives have a claim on an estate regardless of what is written in a will. Inheritance law in Luxembourg dictates that a certain percentage of the estate needs to be reserved as follows:

  • At least 50% to the children if there is one child
  • At least 66.6% to the children if there are two children (one-third each)
  • At least 75% to the children if there are three or more children (25% each in the case of three children)

 

Children can waive their right to the reserved portion but this has to be done in a declaration to the court registry.

Surviving spouses' inheritance tax in Luxembourg

Surviving spouses are not protected heirs under inheritance law in Luxembourg but arrangements can be made through the marriage contract to ensure that spouses receive either:

  • ownership of the unreserved portion of the estate and lifetime use (usufruct) of the reserved portion
  • usufruct of the whole estate

 

This only applies if the deceased's inheriting children are also the children of the spouse.

Aside from the portion of the estate reserved for 'forced heirship', a person may distribute their assets as they wish through making a will. If no will has been left, then the laws of intestate succession apply. According to inheritance law in Luxembourg, this means that the estate is distributed between the following:

  • children and their descendants (grandchildren, great-grandchildren, etc.)
  • if no children or descendants, then the surviving spouse
  • if none of the above, then parents and their descendants (siblings, nieces/nephews)
  • if none of the above, then grandparents and their ascendants (great-grandparents, etc.)
  • if none of the above, then more distant relatives (aunts, uncles, cousins)
  • if none of the above, then the state
 

If a person is survived by both children and a spouse, then the spouse has a choice between usufruct of the whole estate or ownership of the unreserved portion of the estate (not less than 25%). Registered partners are treated the same as spouses under inheritance law in Luxembourg.

The matrimonial regime between deceased and spouse affects which assets are included as part of the estate:

  • Community regime (the default regime) – all assets are co-owned except those acquired before the marriage or through inheritance or gift
  • Universal co-ownership regime – everything is co-owned
  • Separate ownership regime – each spouse retains sole ownership of assets

 

Inheritance law in Luxembourg: universal succession 

In Luxembourg, universal succession applies. This means that the estate automatically passes to heirs without the need for probate. All heirs, either statutory or through a will, can choose whether to accept or reject their inheritance. In Luxembourgian inheritance law there are three options:

  • Accept the inheritance, which means obligation to pay debts even if they exceed the value of the estate
  • Accept subject to an inventory which determines the net value of the estate once debts and costs are accounted for 
  • Rejection of inheritance

 

Restrictions and acceptances

Rejections and acceptances subject to inventory need to be done in a declaration to the court registry.

If you have property in Luxembourg, information on how to register it can be found here.

Law firms in Luxembourg

There are several law firms in Luxembourg to choose from. Expatica's online database of legal services can be found here. Here's a short list of English speaking lawyers in Luxembourg for your reference:

 
Law firms in Luxembourg

EU inheritance rules for foreigners in Luxembourg

A change in EU rules on cross-border successions came into effect in August 2015 which means EU citizens can now choose whether the laws of their country of residence or their country of nationality apply to their estate upon their death. This applies even if you are a national of a non-EU country. The rules don't apply in Denmark, Ireland the UK as these countries opted out, although will apply to nationals of these countries if they live elsewhere in the EU.

If you are an expat living in Luxembourg with EU citizenship and want the inheritance laws of your country of nationality to apply rather than inheritance laws in Luxembourg, you need to express this clearly in a will or separate declaration. These laws will then apply as long as they don't contravene local public policy (e.g. discrimination of heirs based on gender or whether born out of wedlock).

The EU rules do not apply to not apply to the following matters linked to your inheritance:

  • inheritance taxes
  • your civil status
  • the property regime of your marriage/partnership (how your property should be divided after the death of your spouse/partner)
  • matters concerning companies

 

Inheritance tax in Luxembourg

Inheritance tax in Luxembourg is levied on the estate of all tax residents of Luxembourg. It is payable by the beneficiaries on the whole estate except on real estate owned abroad. Moveable assets abroad owned by foreign residents are also exempt if they are taxed by the country of nationality.

Inheritance and gift taxes in Luxembourg are collected by the Administration de l'Enregistrement et des Domaines, which is a separate tax collecting authority from the one that collects income tax.

Inheritance tax rates in Luxembourg vary depending on value of assets and relationship between deceased and beneficiary. The current rates are:

Relationship to deceased

Tax on reserved portion

Tax on unreserved portion

Direct descendants and ascendants

None

2.5 - 5%

Spouse/partner with children

None

None

Spouse/partner with no children

5.00%

5.00%

Siblings

6.00%

15.00%

Uncles, aunts, nieces, nephews

9.00%

15.00%

Adopting parents/adopted children

9.00%

15.00%

Great-uncles, aunts, nephews, nieces

10.00%

15.00%

Unrelated parties

15.00%

15.00%

 

The tax rates above are the base rates for inheritances below EUR 10,000. For inheritances above EUR 10,000, see the table below:

 

Taxable amount

Percentage increase from base rate

EUR 10,000 – 20,000

10.00%

20,000 – 30,000

20.00%

30,000 – 40,000

30.00%

40,000 – 50,000

40.00%

50,000 – 75,000

50.00%

75,000 – 100,000

60.00%

100,000 – 150,000

70.00%

150,000 – 200,000

80.00%

200,000 – 250,000

90.00%

250,000 – 380,000

120.00%

380,000 – 500,000

130.00%

500,000 – 620,000

140.00%

620,000 – 750,000

150.00%

750,000 – 870,000

160.00%

870,000 – 1 million

170.00%

1 million – 1.25 million

180.00%

1.25 million – 1.5 million

190.00%

1.5 million – 1.75 million

20.00%

Over 1.75 million

22.00%

There is a tax-free allowance on inheritances with a net value of up to EUR 1,250. Spouses without children have an allowance of EUR 38,000. Charities are exempt from inheritance tax in Luxembourg.

Gift tax rates in Luxembourg for donations made during the lifetime vary from 1.8% to 14.4%.

Inheritance ipots (tax) Luxembourg is due within 6 weeks of assessment. Luxembourg has no double tax treaties with other countries for inheritance and gift tax purposes.

Wills in Luxembourg

Expats living in Luxembourg do not have to make a Luxembourgian will. Authorities in Luxembourg will recognise wills drawn up in other countries as long as they comply with national regulations. However, if you are a foreign resident and you haven't stipulated in your will that you want your estate to be handled according to the laws of your country of nationality, Luxembourgian inheritance laws will apply and if you have left proportions of your estate that encroach upon the amounts reserved for statutory heirs, these amounts will have to be reduced.

You might want to consider making a will in Luxembourg if you have property there. This will save money and time in the event of death as you won't have to get your national will translated or wait for the Grant of Probate. You can choose to have two wills – a Luxembourgian will and a will made in your own country - as long as one doesn't accidentally revoke or negate the other. It is best to consult with a solicitor first if you are thinking of doing this. Details on how to find English-speaking lawyers in Luxembourg can be found here.

There are three main types of will in Luxembourg:

  • Holographic will – handwritten will signed and dated by the testator
  • Notarially recorded will – a will received by two notaries, or a notary and two witnesses
  • Sealed or mystic will – will written by the testator, sealed in an envelope and then given to a notary in front of witnesses

 

Joint wills are prohibited under inheritance law in Luxembourg.

Notarial wills and sealed wills are automatically registered. Holographic wills can be registered if kept with a notary.

Writing a will in Luxembourg

Procedures for writing a will in Luxembourg vary depending on the type of will.

Holographic will

The simplest and cheapest form of will in Luxembourg although the easiest type to contest the validity of as it hasn't been checked by a notary. The will is entirely handwritten, dated and signed by the testator. It is then kept in a safe place or can be registered by a notary.

Notarial will

The will is drawn up under guidance of a qualified notary. This is more expensive but ensures that the will complies with guidelines. The will is signed and given to a notary in front of another notary or two other witnesses. The will is filed in the national register of wills.

Sealed will

This will is drawn up independently and signed by the testator, then presented in an envelope by a notary who seals it in front of another notary or two witnesses. The sealing is done by the notary to prevent any substitution, falsification and to ensure everything complies with guidelines. The will is filed in the national register of wills.

There is no legal requirement to appoint an executor under inheritance law in Luxembourg but a testator may name on in their will if they wish. If no executor is named or a person dies intestate, then a notary will be appointed to administer the estate.

Details on finding a notary in Luxembourg can be found here.

Unclaimed inheritance

If an inheritance is unclaimed, if there are no heirs or it is rejected by all beneficiaries, then the estate is passed to the government in Luxembourg.

Further information

Click to go to the top of our guide to Luxembourg's inheritance tax law and inheritance tax rates.

 

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