Luxembourg fund taxation, in full.

Tax by vehicle

SOPARFI, SICAR, SIF and RAIF are taxed very differently — the choice of vehicle is often as much a tax decision as a regulatory one.

Corporate income tax & municipal business tax

Corporate income tax applies to Luxembourg tax-resident corporations on worldwide income, unless exempt under a treaty or domestic law; foreign corporations pay CIT only on Luxembourg-source income. Partnerships (other than those limited by shares) are generally tax-transparent, so income flows through directly to investors rather than being taxed at the vehicle level.

Partnerships carrying on a genuine commercial activity are separately liable to municipal business tax at their own level — but this is not generally expected to apply to partnerships used in a typical PE fund context, which usually don't carry on a commercial activity themselves.

Subscription tax (Taxe d'Abonnement)

Levied on the net asset value of Luxembourg funds. The standard rate is 0.05%, reduced to 0.01% for Private Equity funds structured as SIFs or SICARs (and the SIF-like RAIF regime). An additional ESG-related reduction applies to funds that meet sustainable investment criteria or align with SFDR / EU Taxonomy — incentivising sustainable strategies. Certain fund types (money market funds, microfinance funds, pension funds, ELTIFs, and SIFs investing in other funds already subject to the tax) can be exempt entirely.

Net wealth tax

Luxembourg corporations are liable to net wealth tax on worldwide wealth; foreign corporations only on their Luxembourg net wealth. Partnerships (other than those limited by shares) are generally exempt.

• Standard rate: 0.5% on net wealth up to €500 million, 0.05% above that (subject to adjustments, e.g. for qualifying shareholdings)
• SIFs and RAIFs applying the standard (SIF-like) regime are fully exempt from NWT
• SICARs and SICAR-regime RAIFs are subject to the minimum NWT only — ranging from roughly €535 to €32,100 depending on balance sheet total, or a fixed €4,815 in certain conditions

Capital gains, global minimum tax & carried interest

• Capital gains for non-residents: where a double tax treaty applies, Luxembourg generally cannot tax gains on shares in a Luxembourg company. Absent a treaty, gains are only taxable if the non-resident held a "substantial interest" (over 10%) and the sale occurs within a defined window. Gains on shares in a SIF, RAIF (in corporate form) or SICAR held by non-residents are fully exempt from Luxembourg tax regardless.
• Global minimum tax (Pillar Two): since 31 December 2023, Luxembourg entities within a multinational or large-scale domestic group with consolidated annual revenues of at least €750 million (in 2 of the last 4 years) may be subject to a top-up tax where the effective rate falls below 15%. Investment funds generally benefit from exemptions, but consolidated fund structures should assess this case by case.
• Withholding tax: 15% on dividend payments (17.65% if not charged to the shareholder), reducible to 0% via treaty or the participation exemption regime. Liquidation proceeds are not subject to withholding tax. Arm's-length interest payments are generally not subject to withholding tax either.
• Carried interest (2026 regime): effective from the 2026 tax year, Luxembourg introduced a clarified, permanent carried interest tax framework for Luxembourg tax residents, recognising two structures — "contractual carry" (granted free of charge, conditional on pari passu co-investment) and "carried invest" — each with defined preferential tax treatment, provided the carry is held at least six months and represents under 10% of the fund's interests.

Double tax treaty network

Luxembourg has bilateral tax treaties with every EU Member State and most OECD members — a network that keeps expanding. SOPARFIs, SICARs and SICAR-regime RAIFs are, from a Luxembourg perspective, entitled to treaty benefits. Fiscally transparent vehicles (FCPs, SCS, SCSp) generally cannot claim treaty benefits themselves, though their investors may be able to at their own level.

As of 29 July 2025, per LPEA guide Annex 4.

This page is general information only and does not constitute tax advice. Figures are sourced from LPEA's Private Equity in Luxembourg guide (May 2026). Tax rules change; please confirm current rates and your specific position with a licensed Luxembourg tax advisor before acting on any of this.