RelokeaLuxembourg's impatriate tax regime
Luxembourg exempts from tax 50% of the annual gross remuneration of certain employees who have come from abroad, on a base capped at €400,000 — that is up to €200,000 exempt a year, during the year of arrival and the eight following ones.
It is a considerable advantage, and it is far narrower than what you read everywhere.
The point that rules most readers out: it is closed to cross-border workers
This is not an interpretation. It is the first of eight cumulative conditions:
“1. the impatriate is a natural person having their tax domicile or habitual residence in the Grand Duchy of Luxembourg;”
A cross-border worker has, by definition, neither. And the three successive generations of the regime — 2014, 2021, 2025 — already required it: there has never been a version open to non-residents.
The second lock targets precisely the Luxembourg catchment area
“2. during the 5 tax years preceding that of taking up employment […] the impatriate has neither been tax-domiciled in the Grand Duchy, nor lived within less than 150 km of the border, nor been subject in the Grand Duchy to personal income tax on professional income;”
A candidate from Thionville, Metz, Arlon or Trier is doubly excluded — even if they move to Luxembourg. A candidate from Geneva, the canton of Vaud or Haute-Savoie passes through this door.
The order of operations decides everything
The regime targets only two profiles: the employee seconded from a group entity located outside Luxembourg, and the employee “directly recruited abroad”. It is the only variable the candidate fully controls, and it is irreversible.
| What the candidate does | Result |
|---|---|
| They sign their Luxembourg contract from abroad | “recruited abroad” → eligible |
| They move first, then look locally | outside the regime, definitively — the following year, condition 2 fails as well |
Secondment trap: resigning from your current employer to join the same group's Luxembourg subsidiary breaks the employment relationship and the right of return — hence the secondment itself.
The eight conditions, and who can verify them
| # | Condition | Verifiable by |
|---|---|---|
| 1 | Tax domicile or habitual residence in Luxembourg | the candidate |
| 2 | Over 5 years: neither domiciled in Luxembourg, nor within 150 km, nor taxed on professional income | the candidate |
| 3 | The activity represents at least 75% of working time | the candidate |
| 4 | Fixed annual remuneration ≥ €75,000 gross | the candidate |
| 5 | The post does not replace a non-impatriate employee | the employer |
| 6 | Secondment: seniority, employment relationship maintained, right of return, written contract | the employer |
| 7 | Recruitment: in-depth specialisation in the sector | the employer |
| 8 | Impatriates ≤ 30% of the workforce of the company | the employer alone |
Four of the eight conditions escape the candidate, including the 30% quota — a figure they have no way of obtaining. They are to be written into the contract before signature, not after.
And the regime is driven by the employer: it is they who declare the beneficiary on the nominative list of 31 January. An employee cannot claim it alone.
What the exemption does not do
- It is an exemption from income tax: social contributions remain due on the entire gross. Never read it as “50% less in charges”.
- According to the State portal, the contributions relating to the exempt share are not deductible — the real net gain is therefore lower than the naive calculation.
- Beyond €400,000 of annual gross, one more euro brings nothing.
- The advantage stops at the end of the 8th tax year following arrival. Any cross-country comparison must show the ninth year's step.
One clarification in your favour, however: the €75,000 threshold applies to the fixed share, whereas the exemption applies to the total gross, variable pay included.
The Franco-Luxembourg risk, and it is quantifiable
The residence condition is a test of Luxembourg domestic law. It can be met by someone whom France still regards as its resident — spouse and children remaining in France.
Yet the tax treaty grants the tax credit on one condition only: that the income be “effectively subject to Luxembourg tax”. The exempt half is not.
Three sourcing traps, all verified
- The administration's “Impatriés” page is out of date. Showing an update of 29 January 2025, it still describes the old expense-coverage regime and mentions neither the 50%, nor the €400,000, nor the 2024 law. It contradicts the coordinated text of the same administration.
- The Guichet portal adds two conditions absent from the law — one of them taken word for word from a circular repealed since 2021.
- Three distinct schemes were amended by the same law of 20 December 2024, which fuels the confusion: the participation bonus (art. 115(13a), 50% exempt within a limit of 30% of annual gross), the impatriates (13b, 50% of total gross, base capped at €400,000) and the young-employee bonus (13d, condition of being under 30).
What we have not established
- The method for measuring the 150 km — no source specifies it.
- Whether the option to be assimilated to a resident (article 157ter) would satisfy the residence condition: no cross-reference in the text, and we do not deduce.
- No administrative circular interprets the 2025 version of the regime.
- Pro-rating for an incomplete year of arrival is not addressed by the text.
Sources: law of 20 December 2024 (Mémorial A No 589); coordinated text of the L.I.R. from the Administration des contributions directes, in force on 1 January 2026; guichet.public.lu. Consulted and verified on 6 August 2026.