Impatriates Tax Regime - Overhaul Ahead

Impatriates Tax Regime - Overhaul Ahead

To enhance the international competitiveness of Luxembourgish employers, Bill No. 8414, introduced on July 17, 2024, offer a complete overhaul of the impatriates tax regime. The various existing tax benefits (relocation expenses, housing costs, impatriation bonuses, etc.) would be cut-off and replaced with a flat-rate tax relief of 50% of the gross annual salary, excluding partially or fully exempted payments such as participation bonuses or interest subsidies, as well as benefits in kind.

This exemption would apply up to a ceiling of 400,000 EUR of the gross annual salary.

The bill retains all current conditions applicable for the impatriate tax regime and including the period of time which remains the same starting from the year of the arrival until the following eight years.

These changes would take effect on January 1, 2025. It is important to note that impatriates employees who benefit from the current regime before this date can continue to do so, but will have the option to request, through their employer, the application of the new regime; this request cannot be withdrawn.

The bill also provides more precise elements regarding the the conditions under which the main activity might be carried out (75% of the working time) including part-time employees in the calculation of the maximum number of employees benefiting from the regime.