Luxembourg start-up tax credit: what individual investors can claim

Since tax year 2026, private individuals who put at least €10,000 into an eligible young company can deduct 20% of that sum from their income tax, under a law that sets strict conditions for investors and start-ups alike.

The credit equals 20% of the eligible investment and cannot exceed €100,000 per tax year.

Law of 19 December 2025 sets the terms

The Chamber of Deputies adopted bill n°8526 on 17 December 2025, after eight months of debate and opinions from four professional chambers. The law of 19 December 2025, published in Mémorial A n°617 on 22 December 2025, inserts article 154quaterdecies into the income tax law. The credit equals 20% of the eligible investment and cannot exceed €100,000 per tax year. Any portion above that ceiling is lost, while a credit larger than the tax due carries over to the following year without refund. Residents and non-residents assimilated under article 157ter qualify, provided they subscribe new registered shares, paid up in cash, at incorporation or during a capital increase. Investors must keep the shares for three years. Founders and employees stay excluded, and stakes above 30% fall outside the eligible base.

Five years, 50 employees and 15% R&D

The target must be a capital company or cooperative created less than five years earlier, with fewer than 50 employees and a balance sheet or turnover of no more than €10 million. It must employ at least two full-time equivalents and spend at least 15% of its operating costs on research and development in one of the three preceding financial years. Once a company has raised €1.5 million from eligible investors, further sums stop counting. Excluded entities include law, audit and accounting firms, real estate companies, SICARs, listed entities, companies born from mergers and firms that have paid dividends. The investor attaches two certificates from the start-up to the tax return, and an approved auditor or chartered accountant must confirm the R&D threshold, a step Arendt places within its advisory work on eligibility checks and cap tables.

Business chambers compare with Belgium and the UK

The Chamber of Commerce, in its opinion of 30 May 2025, judged the regime competitive but urged a higher rate, noting that Belgian legislation grants between 30% and 45% on up to €100,000 of annual investment. It named the British Seed Enterprise Investment Scheme and the German INVEST programme among the most competitive models. The Chamber of Employees opposed the measure, calling it a tax advantage for the wealthiest. The Chamber of Civil Servants and Public Employees argued that the €10,000 minimum shuts out middle-income savers. The Chamber of Skilled Trades and Crafts called the scheme the first true “tax shelter” instrument in Luxembourg, yet warned that the threshold would mainly reach business angels.

“By facilitating their development and financing, we are fostering the emergence of national and international champions,” said Gilles Roth, Minister of Finance, Government of Luxembourg (translated).

Story generated by AI and proofread by Marc Auxenfants