In July 2025, Luxembourg introduced draft Bill No. 8590 to the Parliament, to modernize the country\u2019s tax treatment for carried interest. The reform replaces temporary measures with a permanent and transparent framework, aiming to align Luxembourg\u2019s system with international standards and strengthen its position as a leading fund hub. This new regime is intended to take effect for the 2026 tax year if approved.<\/p>\n\n\n\n
The reform differentiates between two types of carried interest. Contractual carried interest, granted as performance-based remuneration without an investment stake, would be taxed at a reduced rate roughly one quarter of the standard income tax, resulting in an effective rate near 11\u201313%. Participation-linked carried interest, tied to an actual investment in the fund, may benefit from full or partial exemption if the holding meets certain size and duration criteria.<\/p>\n\n\n\n
Eligibility under the new regime would expand beyond fund managers to include professionals involved in fund management and advisory roles. The draft law also recognises deal-by-deal carry structures and introduces safeguards to prevent misuse, ensuring carried interest remains linked to genuine investment performance.<\/p>\n\n\n\n
If adopted, the reform would offer greater legal certainty, eliminate outdated transitional rules, and make Luxembourg even more attractive for global asset managers seeking stability, transparency, and competitive tax treatment.<\/p>\n\n\n\n
Author: Dany Tong Sam, Partner and Head of Accounting<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" In July 2025, Luxembourg introduced draft Bill No. 8590 to the Parliament, to modernize the country\u2019s tax treatment for carried interest. The reform replaces temporary measures with a permanent and transparent framework, aiming to align Luxembourg\u2019s system with international standards and strengthen its position as a leading fund hub. This new regime is intended to […]<\/p>\n","protected":false},"featured_media":13268,"template":"","meta":{"_acf_changed":false},"global-blog-category":[],"class_list":["post-13270","global-blog","type-global-blog","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\n