Minimum net wealth tax Luxembourg: EUR 535 to 4,815

How much is the minimum net wealth tax in Luxembourg?

The minimum net wealth tax in Luxembourg is EUR 535 where the balance sheet total is at or below EUR 350,000, EUR 1,605 where it exceeds EUR 350,000 without exceeding EUR 2,000,000, and EUR 4,815 where it exceeds EUR 2,000,000. That scale applies from tax year 2025 onwards.

This is not an additional tax, it is a floor. The company computes its net wealth tax under the ordinary rules; where the result falls below the amount in the scale above, that amount is due instead. A loss-making company, a dormant company and a company that has never distributed a cent therefore pay the same minimum as a profitable company of comparable size.

A single figure decides the amount: the balance sheet total. Neither the result, nor turnover, nor the composition of the assets has entered the equation since 2025. That is the main simplification brought by the law of 20 December 2024, and it changes the position of holding companies above all.

What the law of 20 December 2024 changed

The law of 20 December 2024 abolished, for the minimum net wealth tax in Luxembourg, the distinction between predominantly financial companies and all other companies, with effect from tax year 2025. The scale now rests on the balance sheet total alone, in three brackets.

Up to tax year 2024, a company whose financial fixed assets, receivables from affiliated undertakings, transferable securities and bank balances exceeded both 90 % of the balance sheet total and EUR 350,000 fell under a flat minimum of EUR 4,815, whatever its balance sheet. Other companies followed a seven-bracket scale running from EUR 535 to EUR 32,100. The same company could therefore pay EUR 4,815 or EUR 32,100 on an identical balance sheet, depending on the composition of its assets.

The reform has a judicial origin. In a judgment of 10 November 2023, the Constitutional Court held point 2(a) of paragraph 8 of the amended law of 16 October 1934 on net wealth tax to be contrary to the principle of equality before the law: the EUR 350,000 financial asset threshold rested on no rational justification. The legislature responded by rewriting the scale rather than correcting the threshold.

The clear winner is the large holding structure: the maximum per company falls from EUR 32,100 to EUR 4,815. The relative loser is the small operating company whose balance sheet exceeds EUR 2,000,000 without being financial: it used to pay EUR 5,350 and now pays EUR 4,815, a modest gap. For a company with a balance sheet of EUR 25,000,000, by contrast, the annual saving is substantial.

Which companies owe the minimum net wealth tax?

The minimum net wealth tax in Luxembourg targets resident collective entities, meaning the opaque companies whose registered office or central administration sits in the Grand Duchy, whatever their activity. A resident entity is taxable on its worldwide wealth, domestic and foreign; a non-resident entity only on wealth located in Luxembourg.

Some vehicles are exempt from net wealth tax but not from its minimum. Guichet.lu places in that category the securitisation company, the venture capital investment company (SICAR), the pension savings company with variable capital (sepcav) and the pension savings association (assep): exempt from net wealth tax with the exception of the minimum. A securitisation company with a balance sheet of several tens of millions therefore pays EUR 4,815 a year, and that line belongs in the structure's budget from incorporation.

The family wealth management company follows a different logic. The Administration des contributions directes page devoted to it states that it is exempt from corporate income tax, municipal business tax and net wealth tax, subject to the forfeiture clause that applies where it receives at least 5 % of its total dividends from unlisted non-resident companies not subject to a comparable tax. We could not confirm against an official source whether that exemption expressly covers the minimum, and we flag the point below.

Which category a vehicle falls into is settled by the law governing it, not by its corporate purpose: we regularly see structures whose internal documentation announces a general exemption that their legal form does not carry. Funds subject to subscription tax fall under a separate regime.

How is the balance sheet total determined?

The balance sheet total used for the minimum net wealth tax in Luxembourg is that of the last closing balance sheet of the year preceding the key date, the balance sheet being the one drawn up in accordance with the amended income tax law of 4 December 1967. The key date for net wealth tax is 1 January.

Two practical consequences follow. The first is that the scale works in steps rather than in marginal brackets: one euro more than EUR 2,000,000 of balance sheet total moves the minimum from EUR 1,605 to EUR 4,815, with no progressivity. The second is that a gross figure is observed, not a net position. An intra-group loan on the asset side and a debt of the same amount on the liability side inflate the balance sheet total without changing the company's real wealth at all.

That is where the unpleasant surprises sit. We regularly see companies cross a step for purely calendar reasons: a receipt collected a few days before year end, a shareholder current account left unrepaid on 31 December, a bridge loan still open at the closing date. The amount at stake is modest against a balance sheet of several million, but it is entirely avoidable when the question is raised before the accounts are closed rather than after.

Offsetting an asset against a liability also remains prohibited under Luxembourg accounting law: you do not shrink the balance sheet total by presenting a net position. The subject belongs in the preparation of the annual accounts, while the closing date and the timing of intra-group flows are still variables.

Why do holding companies so often pay exactly the minimum?

Because in Luxembourg the base of the ordinary net wealth tax and the base of the minimum are not the same thing: the first is net of debts and exemptions, the second is gross. Ordinary net wealth tax hits taxable wealth at 1 January, valued under the amended law of 16 October 1934 on the valuation of assets and securities.

The parent-subsidiary regime does the rest. Its purpose, according to Guichet.lu, is to avoid double taxation of income from substantial participations, of capital gains on their disposal and of the participations held, which are normally subject to net wealth tax. A holding company whose assets consist essentially of qualifying participations therefore sees its taxable wealth collapse, while its balance sheet total remains that of the gross assets.

The result is arithmetic. Ordinary net wealth tax for a collective entity is 0.5 % of taxable wealth up to EUR 500,000,000, then EUR 2,500,000 plus 0.05 % of the excess. Applied to taxable wealth reduced to a few tens of thousands of euros, that computation gives a tax below the floor: the SOPARFI pays the minimum, and will pay it every year for as long as its structure does not change.

The lesson for group management is direct. Multiplying holding vehicles multiplies minimums: five holding companies each above EUR 2,000,000 of balance sheet total represent a fixed annual tax cost, independent of any profitability. That belongs in the balance when designing a holding structure, alongside domiciliation and bookkeeping costs.

Can the tax reduction reserve wipe out the minimum?

No: the minimum net wealth tax in Luxembourg cannot be reduced by setting up a reserve, because the mechanism under paragraph 8a of the net wealth tax law operates on the ordinary tax and not on its floor. The Administration des contributions directes says so expressly.

The mechanism itself is worth knowing, because it is under-used. A taxpayer claiming the reduction must book a reserve equal to five times the reduction claimed and maintain it for five tax years. The reduction is capped at the amount of corporate income tax, increased by the employment fund contribution, due before credits for the tax year immediately preceding the one for which the reduction is claimed.

The price is paid on early distribution. Where the company distributes all or part of the reserve before the five-year period expires, the reduction granted is cancelled by an increase in net wealth tax for the following year, equal to one fifth of the amount used. Profit allocation and the monitoring of the reserve therefore belong to the same file.

One last budget point: net wealth tax is not a deductible expense. Article 168 of the income tax law lists corporate income tax, net wealth tax and municipal business tax among non-deductible expenses. The minimum therefore costs its face amount, with no corporate income tax saving in return.

When is the minimum net wealth tax filed and paid?

Net wealth tax is declared together with corporate income tax and municipal business tax, on the form 500 return accompanied by its annex on the entity's wealth at 1 January of the tax year. Filing is done electronically with the Administration des contributions directes.

Payment, however, follows a schedule of advances rather than the return. For municipal business tax and net wealth tax of collective entities, quarterly advances fall due on 10 February, 10 May, 10 August and 10 November of the tax year. Their amount is set in principle at one quarter of the tax resulting from the last assessment issued, and may be changed on the taxpayer's reasoned request or by the administration of its own motion.

That mechanism produces a counter-intuitive effect worth anticipating. A company whose balance sheet has just crossed the EUR 2,000,000 step keeps paying advances based on the earlier assessment: the catch-up arrives with the assessment notice, sometimes two years later, and is then payable in full. A request to revise the advances is the only tool to smooth that bump, and it is prepared alongside the corporate tax return.

In a group, two rules overlap. There is no consolidated assessment for net wealth tax: each company remains liable on its own taxable wealth. But where the fiscal unity regime of article 164bis of the income tax law applies, the ACD states that the total minimum net wealth tax owed by all companies of the integrated group cannot exceed EUR 32,100.

On the files we support, computing the minimum is never the bulk of the work: reconstructing the balance sheet total at the right date and tracking the advances take the time, and that time is billed at the hourly rate published in our pricing grid. A company that discovers its minimum when the assessment notice arrives has almost always lost the chance to plan for it.

Sources and verification

Written for Financial Services Luxembourg and reviewed before publication by Mickaël LOC, licensed accountant (authorisation 10077274): the amounts, thresholds, dates and legal references in this article were verified against official sources on 6 September 2026.

Sources consulted: the ACD page on the net wealth tax tariff for collective entities, for the minimum scale applicable from 2025, the earlier scale of EUR 535 to 32,100, the abolished financial asset criterion, the 0.5 % and 0.05 % rates and the EUR 32,100 cap under fiscal unity; the ACD page on the net wealth tax reduction for collective entities, for the five-fold reserve, the five-year period, the cap based on the previous year's corporate income tax and the impossibility of reducing the minimum; the ACD pages on the taxable wealth of a resident entity, on tax advances and on non-deductible expenses; the Guichet.lu page on net wealth tax, for the key date and the vehicles exempt except for the minimum; the Guichet.lu page on the parent-subsidiary regime; the law of 20 December 2024 and the Constitutional Court judgment of 10 November 2023, published on Legilux.

Two points could not be verified against an official source at that date. The first is the position of the family wealth management company as regards the minimum: the ACD page states a net wealth tax exemption without repeating the express reservation made for the securitisation company, the SICAR, the sepcav and the assep. The second is the detail of the conditions in paragraph 60 of the valuation law that carries the net wealth tax exemption for participations, in particular the date on which the thresholds are assessed. Readers can check both against the coordinated text published by the ACD and, for their own structure, in the unit value assessment notice served on them.

This article sets out the law as it stands at the publication date. Scales, thresholds and calendars change, and any decision binding your structure should be verified as at the date you rely on it. Report an error to contact@financialservices.lu: the correction is dated in the article.