Two key tax reforms for limited liability companies, adopted in Luxembourg at the end of 2025

In December 2025, Luxembourg adopted two significant tax measures which, although distinct in purpose, are part of the same overall strategy. They reflect the country’s commitment to remaining fully aligned with international tax standards while staying attractive to the innovative and entrepreneurial economy.

These reforms concern, on one hand, the taxation of international groups under the Pillar 2 framework, and on the other hand, support for private investment in innovative start-ups.

A strengthening of the international tax framework and transparency

The first law enacted implements the European directive known as “DAC 9,” which organizes the automatic exchange of tax information related to the GloBE framework, the central pillar of the international minimum taxation project for large companies. This framework requires the affected multinational groups to submit a standardized report allowing tax authorities to assess their effective tax rate and, where applicable, collect a supplementary tax.

With this reform, Luxembourg establishes a clear legal basis for these information exchanges between states and aligns its national legislation with the latest European and international guidelines. The goal is twofold: to ensure greater transparency while providing a stable and predictable framework for businesses operating in Luxembourg.

The law also introduces technical adjustments aimed at facilitating the practical implementation of these obligations and reducing redundant formalities. It thus reflects a logic of compliance, as well as administrative pragmatism.

A new tax tool to support innovative start-ups

At the same time, the Luxembourg legislature introduced a measure focused on the local economy and innovation. Starting from the 2026 fiscal year, a new tax credit will be granted to individuals who invest in innovative start-ups meeting specific criteria regarding age, size, and activity.

This measure aims to encourage private capital contributions to young companies, strengthening their financial structure and supporting their development during the early years of operation. The scheme is reserved for external investors and targets companies demonstrating genuine innovation, particularly through their research and development activities.

Through this mechanism, Luxembourg seeks to energize its entrepreneurial ecosystem and promote the emergence of high-value projects within its territory.

An overall perspective: international rigor and economic attractiveness

Although these two reforms target different audiences, they are part of the same strategy. Luxembourg fully embraces the new international requirements on taxation and transparency for large groups while implementing targeted measures to support innovation, private investment, and the growth of start-ups.

This combined approach reflects a clear positioning: in an increasingly harmonized and regulated global tax environment, attractiveness no longer depends solely on taxation, but also on the quality, coherence, and predictability of the legal and economic framework.