How inheritance tax works in Luxembourg
Luxembourg inheritance tax depends on the relationship between the deceased and the heir, the type of share received, and whether the estate is a Luxembourg resident estate or a foreign-domicile estate with Luxembourg real estate.
Direct descendants and ascendants, spouses, and qualifying civil partners are generally exempt on the legal portion. Other heirs can face base rates and surcharge-like increases that rise quickly with estate value.
If the deceased was not domiciled in Luxembourg, a transfer tax can apply to Luxembourg immovable property. Heirs usually need to file with the AED before the tax is assessed and paid.
Tax rates at a glance
- Direct line / spouses
- 0%
- Siblings
- 6%
- Uncles / nieces / nephews
- 9%
- Other persons
- 15%
- Transfer tax
- Yes
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
FamiliesExpatsHigh earnersEstate plannersInvestors
Watch out for
- Luxembourg inherits by relationship and asset type, not just by will. A clear estate plan still matters.
- The tax-free treatment for spouses and direct line heirs is limited to the legal portion, so testamentary gifts can be taxed differently.
- Non-resident estates with Luxembourg real estate can trigger transfer tax even when there is no broader estate tax.
Frequently asked questions
Does Luxembourg have inheritance tax?
Yes, but the result depends on the heir. Spouses, qualifying civil partners and direct line heirs are generally exempt on the legal portion, while other heirs can face higher rates.
Is there estate tax in Luxembourg?
Luxembourg uses inheritance tax and, in some cases, transfer tax on Luxembourg real estate in non-resident estates. The outcome depends on domicile, relationship and the asset type.
Do expats need a will in Luxembourg?
Yes. No inheritance tax does not mean no probate or succession issues, especially for bank accounts, property and company shares.