Luxembourg Budget 2027: Key tax measures for businesses

Introduction
On 7 October 2026, Luxembourg's Finance Minister presented the draft budget legislation for 2027. The proposed measures form part of a broader fiscal agenda that the current coalition government has been rolling out since taking office. For businesses and investors with a Luxembourg nexus, we have set out the most important takeaways below.

Lower corporate tax rate
The headline measure for businesses is a further one percentage point reduction in the corporate income tax rate. For companies with taxable income exceeding EUR 250,000, the applicable rate would fall to 15%, whilst the reduced rate for income up to EUR 200,000 would decrease to 13%. 

For a company registered in Luxembourg City, the combined tax burden (taking into account municipal business tax and the solidarity surcharge) would decrease to approximately 22.8%. 

Indefinite loss carryforward
Under current rules, tax losses arising on or after 1 January 2017 may only be carried forward for a maximum of seventeen years, after which they lapse. The draft legislation proposes to remove this time limit entirely, allowing losses to be carried forward without limitation. This change would apply equally for corporate income tax and municipal business tax purposes, and would also benefit losses already generated since the restriction was introduced.

Enhanced investment tax credit
Companies making qualifying investments in digitalisation or in green and energy related projects will be able to benefit from higher investment tax credit rates. The primary rate would increase from 18% to 21%, and the secondary rate from 6% to 9%. The existing eligibility conditions otherwise remain in place.

Extended speculation period for capital gains
One measure that will require careful consideration by investors and fund managers is the proposed extension of the period during which gains on movable assets (including carried interest) are treated as speculative. The threshold would double from six to twelve months. Gains realised within this window would be taxed as speculative income, rather than benefiting from the more favourable treatment that applies to gains held over the longer term.

Nonresident investors are not unaffected. Where Luxembourg's domestic rules give Luxembourg taxing rights over gains from a substantial participation (generally defined as a holding exceeding 10%), and where the applicable double tax treaty does not override this, the extended period would also apply to them.

Businesses, fund managers, and investors exposed to this regime should review the timing of planned disposals in light of this change.

New rules for employee stock options
A separate legislative proposal, running alongside the budget, sets out to clarify the tax treatment of employee stock option plans and to introduce a dedicated preferential regime for qualifying options granted by young innovative companies. This sits alongside a broader package of measures aimed at attracting and retaining talent in Luxembourg, including the existing expatriate regime and participation bonus rules.

Business transfer relief
A gift exemption in the context of business transfers has been signalled by the Finance Minister. The precise scope and conditions of this measure have not yet been published, and further detail is expected in due course.

Next steps
The proposed measures represent a meaningful step forward for businesses operating in or through Luxembourg.  The draft legislation is subject to parliamentary review and may be amended before enactment. We will continue to monitor developments closely.