Luxembourg has a civil law legal system. The judicial system of Luxembourg is organised into two main branches.

The Judicial Courts

This branch deals with civil and criminal matters. It is composed of three main levels.

• Lower courts –
1. Justice of the Peace Courts (Justices de paix), which handle minor civil disputes and small claims, as well as certain tenancy and employment cases.
• Intermediate courts –
1. District Courts (Tribunaux d’arrondissement), which deal with more significant civil and criminal cases and hear appeals from the Justice of the Peace Courts.
• Higher courts –
1. Court of Appeal (Cour d’appel), which reviews judgments from District Courts.
2. Court of Cassation (Cour de cassation), which is the highest court in the judicial order, ensuring the correct application of the law (it does not retry cases but reviews legal compliance).

The Administrative Courts

This branch deals with disputes involving public authorities or administrative decisions. It includes:

• the Administrative Tribunal (Tribunal administratif), which is the first instance for administrative disputes; and
• the Administrative Court (Cour administrative), which hears appeals against judgments of the Administrative Tribunal.

Constitutional Court

Luxembourg also has a Constitutional Court (Cour constitutionnelle), which is separate from these two branches. It rules on the conformity of laws with the Constitution when a question is referred to it by a court.

Foreign investments in Luxembourg are not generally subject to prior approval. However, a foreign direct investment (FDI) screening mechanism applies to certain sensitive investments. This mechanism was introduced in 2023 and targets investments that may affect public security or public order. The screening mechanism applies to foreign investments made by an investor – whether acting individually, jointly or through intermediaries – that both (i) establish or maintain lasting and direct links with a Luxembourg entity, and (ii) confer the ability to exercise meaningful influence over that entity’s management in the context of a critical activity in Luxembourg that could affect public security or public order.

Critical activities include:

• sectors such as energy, transport, water, aerospace, agrifood, health, communications, data processing and storage, defence, media and finance, as well as activities involving dual-use goods;
• production or research connected to these sectors; and
• ancillary activities that provide access to locations where such operations are carried out or where sensitive information is stored.

An investor is deemed to exercise effective control over an entity in particular where it:

• holds, directly or indirectly, a majority of the voting rights;
• is entitled to appoint or remove most members of the management or supervisory body while being a shareholder;
• controls a majority of voting rights through an agreement with other shareholders; or
• directly or indirectly holds more than 25% of the voting rights, or reaches this threshold at any time.

Before completing a foreign direct investment in Luxembourg, the investor must notify the Ministry of the Economy. If the investor exceeds the threshold of 25% of voting rights in a Luxembourg-law entity as a result of events that modify the distribution of the capital, the foreign investor has a period of 15 calendar days to notify the Ministry of the Economy.

The authorities then have a two-month period to assess whether the transaction falls within the scope of the screening regime. If a formal review is initiated, a decision is generally taken within 60 days (subject to certain exceptions) to determine whether the investment poses a risk to public security or order, and whether it should consequently be blocked or be authorised subject to conditions.

Failure to comply with the notification requirement or with any conditions imposed may lead to sanctions. These may include the suspension of voting rights, the amendment or unwinding of the transaction, revocation of the authorisation, and financial penalties of up to EUR1 million for individuals and EUR5 million for legal entities. Sanctions can be appealed in front of the Administrative Tribunal. The appeal must be filed within one month from the date of the notification of the challenged decision.

Under the Law of 14 July 2023, the Luxembourg authorities may authorise a foreign direct investment subject to conditions where necessary to ensure that the transaction does not undermine public security or public order. Although the law does not provide a detailed list of possible commitments, it gives the Ministry of the Economy broad discretion to impose mitigation measures tailored to the identified risks.

The commitments that may be required typically aim to preserve strategic assets, sensitive information and operational resilience. These may include the following.

• Governance and control safeguards –
1. limiting the investor’s decision-making powers in sensitive areas;
2. ensuring that certain key decisions remain subject to approval by Luxembourg-based management or authorities; and
3. appointment of independent or approved board members.
• Protection of sensitive information –
1. restrictions on access to confidential, strategic or security-related data;
2. implementation of data localisation or cybersecurity measures; and
3. segregation of IT systems or information flows.
• Operational and continuity commitments –
1. maintaining critical activities, infrastructure or know-how in Luxembourg;
2. commitments to ensure continuity of supply or services in strategic sectors (eg, energy, telecoms, finance); and
3. restrictions on transferring key assets or technologies abroad.
• Ownership and structural undertakings –
1. caps on shareholding or voting rights beyond certain thresholds;
2. prohibition of subsequent transfers to third parties without approval; and
3. ring-fencing of sensitive business units.
• Reporting and compliance obligations –
1. regular reporting to the authorities on compliance with commitments; and
2. acceptance of monitoring mechanisms or audits.

A decision by the Luxembourg authorities prohibiting (or conditioning) a foreign direct investment constitutes an administrative act and can therefore be challenged before the Administrative Courts. An investor may bring an action before the Administrative Tribunal (Tribunal administratif), typically seeking annulment of the decision (the standard form of review in administrative law).

The Tribunal will not reassess the transaction from a pure economic or policy standpoint, but will examine:

• the legality of the decision (compliance with the FDI law of 14 July 2023 and general administrative law principles);
• its procedural correctness (respect of due process, rights of defence, reasoning); and
• manifest errors of assessment or misuse of powers, including whether the risk to public security or public order has been properly justified.

Rulings of the Administrative Tribunal can be appealed before the Administrative Court (Cour administrative), which has the final say.

The standard deadline to initiate a judicial challenge is three months from:

• the notification of the refusal decision; or
• the date on which the investor became aware of it.

Luxembourg offers a wide range of corporate forms, but in practice the most commonly used vehicles are as follows.

Private Limited Liability Company (Sàrl)

• Key characteristics –
1. liability: limited to contributions;
2. minimum share capital: EUR12,000; and
3. minimum shareholders: one.
• Governance –
1. managed by one or more managers; and
2. managers may or may not be shareholders.
• Typical uses –
1. most widely used corporate form in Luxembourg;
2. suitable for holding companies, operational businesses and group subsidiaries; and
3. preferred where control over shareholders and flexibility are important.

Public Limited Liability Company (SA)

• Key characteristics –
1. liability: limited;
2. minimum share capital: EUR30,000; and
3. minimum shareholders: one.
• Governance (flexible structure) –
1. one-tier system: board of directors; or
2. two-tier system: management board + supervisory board.
• Typical uses –
1. suitable for large companies, public or listed companies, or structures seeking flexibility in financing instruments; and
2. can publicly offer shares.

Partnership Limited by Shares (SCA)

• Key characteristics –
1. hybrid of company and partnership;
2. liability: limited for limited partners but unlimited for at least one general partner; and
3. minimum share capital: EUR30,000.
• Governance –
1. controlled by the general partner, who manages the company.
• Typical uses –
1. often used for investment structures, and situations where control needs to remain with a specific sponsor; and
2. allows public listing, while limiting takeover risk.

Limited Partnerships (SCS and SCSp)

• Key characteristics of the SCS (common limited partnership) –
1. legal personality: yes;
2. liability: limited partners have a limited liability and the general partner has an unlimited liability; and
3. minimum capital: none.
• Key characteristics of the SCSp (special limited partnership)(similar to SCS but with the following differences) –
1. no legal personality; and
2. highly flexible structure.
• Governance –
1. typically managed by the general partner.
• Typical uses –
1. very popular for private equity, investment funds and joint ventures; and
2. favoured due to contractual flexibility, absence of capital requirements, and tailored governance arrangements.

Simplified Joint Stock Company (SAS)

• Key characteristics –
1. liability: limited;
2. minimum share capital: EUR30,000; and
3. cannot publicly offer shares.
• Governance –
1. must have at least a chairman, but governance is otherwise flexible.
• Typical uses –
1. suitable for start-ups and joint ventures;
2. used when flexible governance is required while retaining some corporate features.

Other Forms

These are less common in practice.

• Simplified Sàrl (Sàrl-S) – low-capital form for entrepreneurs.
• General partnership (SNC/SENC) – unlimited liability.
• Co-operative (SCOP) – flexible ownership structure.
• European company (SE) – cross-border EU operations.

Main Steps

The following are the main incorporation steps.

Preparation phase

Before incorporation, the founders must:

• choose the legal form (eg, Sàrl, SA, partnership);
• prepare the constitutional documents (articles of association or partnership agreement); and
• arrange capital contributions.

Typically, a bank account is opened and the share capital is deposited and blocked until incorporation.

Incorporation act

Most companies (eg, SA, Sàrl) are incorporated by notarial deed before a Luxembourg notary. Some partnerships (eg, SCS, SCSp) may be incorporated by private instrument.

The notary will:

• verify compliance with legal requirements (identity, capital, documents); and
• formally execute the incorporation deed.

Registration and publication

Following incorporation, the deed is filed with the registration authorities and registered with the Luxembourg Trade and Companies Register (RCS). It is then published in the official gazette (RESA).

Timing of Incorporation

Incorporation is notarial-driven for most company types and results in immediate legal existence upon execution of the deed. The process is completed by registration and publication shortly afterwards, with a key reference point being the one‑month filing period.

Additional sector-specific authorisations may extend the timeline depending on the activity.

The overall process can be summarised as:

• preparation phase (drafting, bank account, capital);
• execution before notary → company legally exists;
• filing and publication (within approximately one month); and
• additional licences/registrations (if applicable).

Private companies in Luxembourg are subject to extensive reporting and disclosure obligations, which can be summarised as follows.

Corporate Records and Ongoing Obligations

All companies must maintain key corporate documentation (books and records) at the registered office. These include minutes of shareholders’ meetings and board meetings, current articles of association, shareholders’ or members’ register. This ensures transparency of governance and ownership internally.

Filing and Disclosure of Annual Accounts

Preparation and approval

Annual accounts must be prepared by the management of the company, whether this is a board of directors, or one or more managers. These accounts must then be approved by the shareholders. Such approval is typically given at a general meeting, which is mandatory for public limited liability companies (SAs) and for private limited liability companies (Sàrl) with 60 or more shareholders. For smaller Sàrl, approval may instead be granted through written shareholder resolutions.

Filing and publication

Once approved, the annual accounts must be filed with the Luxembourg Business Registers (RCS), where they become publicly available. Filing must take place within one month following shareholder approval. Failure to comply with this obligation may result in sanctions, including fines, potential liability of directors or managers, and, in serious cases, the possible dissolution of the company.

Changes to Constitutional Documents

Any amendment to the articles of association must be adopted by the shareholders, generally at an extraordinary general meeting, and for corporate entities such as SAs and Sàrl such amendments typically require execution before a notary. Once adopted, the changes must be filed with the RCS and published in the official gazette (RESA). This process ensures that key structural changes are publicly disclosed.

Changes in Management and Corporate Organs

Although the documents do not set out each step of the process in detail, they establish that corporate records must include minutes and decisions relating to the appointment and removal of directors or managers. In addition, the notarial and registration framework implies that changes requiring formal corporate acts are filed and published through the RCS system. As a result, changes in management are subject to formal recording and, where applicable, registration and public disclosure.

Ultimate Beneficial Owner (UBO) Disclosure

Luxembourg law imposes specific obligations regarding beneficial ownership. Companies are required to register their UBO in the Register of Beneficial Owners (RBE) and to update this information within one month of any change. The information to be disclosed includes the individual’s name, nationality, date and place of birth, country of residence, as well as the nature and extent of the ownership or control exercised. A UBO is generally defined as a natural person who directly or indirectly holds more than 25% of the shares or voting rights, or who otherwise exercises control over the entity. This constitutes a key transparency requirement, particularly in the context of anti‑money laundering regulations. Companies must ensure that their beneficial ownership information in the RBE remains up to date.

Shareholder Meetings and Corporate Decisions

Companies are required to organise the annual approval of their financial statements each year. In this context, shareholders typically decide on the following:

• the approval of the annual accounts;
• the allocation of profits (including the declaration of dividends);
• the discharge of the management for the performance of their duties; and
• the appointment or removal of directors and auditors, where applicable.

All such decisions must be properly documented and retained in the company’s records.

Luxembourg company law offers flexible governance models, which vary depending on the legal form.

SA

The SA provides the most flexible governance framework, as it can operate under either a one-tier or a two-tier system. Under the one-tier system, the company is managed by a board of directors. The board is appointed by the general meeting of shareholders and is responsible for the overall management of the company. Under the two-tier system, governance is divided between a management board, which is responsible for the day‑to‑day management; and a supervisory board, which oversees and monitors the management board. The supervisory board is appointed by the shareholders, while the management board may be appointed by either the supervisory board or the shareholders, depending on the articles of association. The SA is therefore characterised by a choice between monistic and dualistic governance, making it suitable for more complex organisations.

Sàrl

The Sàrl follows a simpler, purely one-tier structure. It is managed by one or more managers, who may act individually or collectively (often as a board of managers, although this is not mandatory). There is no two-tier system available for this entity. This streamlined governance reflects the Sàrl’s typical use for closely held companies, subsidiaries and SMEs.

SCS and SCSp

Limited partnerships (both SCS and SCSp) follow a contractual and flexible governance model rather than a formal tiered system. They are generally managed by one or more managers, but in practice most often by their general partner. There is no formal one-tier versus two-tier distinction, and governance is largely determined by the partnership agreement, which can be tailored to the needs of the parties. This flexibility makes partnerships particularly suited for investment funds and joint ventures.

SCA

The SCA combines features of a company and a partnership and is typically managed by its general partner, who exercises control over the company’s management. Like partnerships, it does not follow the classic one-tier/two-tier distinction but instead relies on a controlled management structure centred on the general partner.

SAS

The SAS is characterised by a flexible and largely contractual governance structure.

The law requires at least a chairman (président), but otherwise allows significant freedom to organise governance arrangements in the articles of association. This structure does not strictly follow a traditional one-tier or two-tier model and is designed for tailored governance, particularly in joint ventures or start-ups.

Overview

Overall, Luxembourg company law combines classical corporate governance models (for SAs) with highly flexible, contractual approaches (for partnerships and SAS).

The liability of directors and officers in Luxembourg is primarily governed by:

• the Law of 10 August 1915 on commercial companies;
• the Civil Code (general tort liability); and
• where relevant, the Criminal Code and Commercial Code.

Directors act as agents of the company and benefit from the principle of separate legal personality (the “corporate shield”), meaning they are not automatically personally liable for corporate obligations. However, this protection is not absolute and liability may arise in several situations.

The liability of directors in Luxembourg primarily arises under civil law, which constitutes the core regime and takes several forms. First, directors may incur liability towards the company itself for faults committed in the performance of their mandate, such as negligence or mismanagement. This is generally characterised as contractual liability (actio mandati) and may only be enforced by the company, or by a liquidator in the context of insolvency. Secondly, directors can be held jointly and severally liable towards both the company and third parties in cases where they breach the Companies Act or the company’s articles of association. In addition, directors may also incur liability under general tort law if they commit a fault that causes damage to third parties, provided that fault, damage and a causal link are established. In practice, Luxembourg courts apply an objective standard of care, assessing the director’s conduct against that of a reasonably prudent and diligent manager acting in similar circumstances.

Beyond civil liability, directors may also face criminal liability in cases involving serious misconduct. This includes, for example:

• the falsification of accounts or corporate documents;
• misappropriation of company assets;
• the distribution of fictitious dividends; or
• fraudulent behaviour.

Such offences may give rise to penalties ranging from fines to imprisonment.

Directors are further exposed in situations of insolvency or bankruptcy, where their responsibility is more closely scrutinised. They may be held liable if mismanagement contributed to the company’s financial distress or if they failed to file for bankruptcy in a timely manner. In more severe cases, courts may impose personal liability for part or all of the company’s debts or order a disqualification from acting as a director.

These liability regimes are closely linked to the fundamental duties incumbent upon directors. In particular, directors must:

• act with due care and diligence;
• behave loyally in the best interests of the company; and
• ensure compliance with applicable laws and the company’s constitutional documents.

Courts will consider lifting the corporate veil where the company structure is misused: for example, in cases of fraud, abuse of rights, or where there is a clear confusion between the assets or identity of the company and those of its controllers. Such intervention remains rare and is assessed on a case-by-case basis, with a high evidentiary threshold.

Employment relationships in Luxembourg are governed by a combination of statutory law, regulations and negotiated instruments, rather than by a single source.

Statutory Law

The primary source is statutory legislation, in particular:

• the Luxembourg Labour Code, which contains the core rules governing employment relationships; and
• additional laws and Grand‑Ducal regulations, which complement the Labour Code and regulate specific aspects of employment.

These statutory rules lay down the fundamental framework applicable to employment relationships, including rights and obligations of employers and employees.

Collective Bargaining Agreements

Employment relationships are also shaped by collective bargaining agreements, which:

• reflect the practices of specific economic or industrial sectors; and
• may supplement or refine the statutory framework.

This means that, depending on the sector, employees’ rights and working conditions may be influenced by collectively negotiated rules.

Individual Employment Contracts

At the individual level, the relationship between employer and employee is governed by an employment contract, which must:

• be provided to the employee at the latest on the first day of employment; and
• set out the key terms and conditions of employment (such as remuneration, working time and duties).

Where applicable, the contract may incorporate provisions from collective agreements.

Role of Practice and Additional Instruments

Rules and practices may reflect sectoral customs, especially through collective agreements and established practices within industries.

Under Luxembourg law, an employment contract must be provided to the employee in writing. Employers are required to provide the contract no later than the first day of employment.

The contract must set out the essential terms and conditions of employment, including:

• identity of the parties;
• starting date;
• job title;
• place of work;
• wages;
• working time;
• holiday entitlement; and
• notice provisions.

Where applicable, the contract may incorporate provisions from collective bargaining agreements.

Luxembourg law distinguishes between different types of employment contracts:

• permanent (open-ended) contracts, which are the standard form; and
• fixed-term contracts, which have a predetermined duration.

The duration is therefore regulated by law, as different rules apply depending on the type of contract (see, for example, 4.4 Termination of Employment Contracts regarding the applicable rules for contract termination).

Luxembourg law sets clear limits on working time. The normal legal working time is:

• 8 hours per day; and
• 40 hours per week.

However, working time may be extended, subject to legal limits, up to:

• 10 hours per day; and
• 48 hours per week (including overtime).

Overtime is also regulated by law. Overtime is defined as any work performed in excess of the working time set out in the employment contract. Overtime is not automatically permitted, and is allowed only in specific circumstances. It is subject to prior notification and authorisation requirements. Overtime does not always require the consent of both parties, except in limited cases.

Additional flexibility in working time can be achieved through specific arrangements, such as a work organisation plan, or a flexitime system. These mechanisms allow companies to adapt working hours within the legal framework.

Luxembourg is not an employment‑at‑will jurisdiction. Termination of employment contracts is strictly regulated by law and must be based on legally recognised grounds and procedures.

An employer may terminate a permanent (open‑ended) employment contract with notice on personal grounds (eg, insufficient performance, behavioural issues) or economic grounds (eg, restructuring, abolition of the position, financial difficulties). An employer may also terminate a contract with immediate effect in cases of serious misconduct, which justifies immediate departure (eg, criminal acts or violence). Fixed-term contracts may generally only be terminated early for serious misconduct.

During the probation period, termination with notice is possible without stating a specific reason.

The dismissal procedure involves the following.

• Dismissal must be notified by written letter.
• For dismissal with immediate effect, the grounds must be stated in the letter.
• For dismissal with notice, the employee may request the reasons, and the employer must respond in writing.

If the employer has 150 or more employees, in addition to the above, a pre‑dismissal interview must be held, allowing the employee to respond to the proposed dismissal.

Dismissal with notice is subject to statutory notice periods depending on seniority:

• two months (less than five years);
• four months (five to ten years); and
• six months (more than ten years).

Employees dismissed with notice and having at least five years of service are entitled to severance pay, ranging from one month’s to 12 months’ salary, depending on length of service. If a dismissal is found to be abusive, the employer may be ordered to pay damages covering material loss and moral prejudice suffered by the employee.

A collective redundancy procedure applies where an employer intends to dismiss for economic reasons:

• at least seven employees within 30 days; or
• at least 15 employees within 90 days.

Employers must follow a specific statutory procedure, which includes the following.

• Information and consultation – the employer must inform and consult staff representatives (staff delegates and trade unions).
• Negotiation of a social plan – the employer is required to negotiate a social plan with staff representatives and trade union representatives.

This social plan sets out measures to address the consequences of redundancies. The social plan typically includes measures to mitigate the impact on employees, and complements the statutory severance and termination protections.

Employee representation is mandatory once a statutory threshold is met.

• Employers must organise the election of staff delegates if they have employed at least 15 employees during the 12 months prior to the elections.
• Companies employing fewer than 15 employees are exempt from this obligation.

Therefore, employee representation is not universal but becomes compulsory once the workforce reaches a certain size.

Employees are represented by staff delegates, who are elected every five years and entrusted with representing the workforce within the company. Their main role is to safeguard and defend employees’ interests, in particular regarding working conditions, job security and employment status, but also to act as an intermediary between employees and the employer.

Employers are subject to mandatory information and consultation obligations vis‑à‑vis employee representatives. Employers must inform and/or consult staff delegates on a range of matters, particularly those relating to working conditions, employment conditions and employee welfare. This establishes a continuous obligation for management to engage with employee representatives on relevant issues.

For companies employing at least 150 employees, the role of employee representatives is strengthened. The employer and staff delegates must jointly take decisions in certain areas. Examples include decisions relating to the introduction or application of technical systems used to monitor employees’ conduct and performance. In these cases, employee participation goes beyond consultation and amounts to co-determination.

In addition to staff delegates, trade unions play a role in representing employees, notably by negotiating collective labour agreements. This adds a second layer of representation, particularly at sectoral or collective bargaining level.

An employee is subject to Luxembourg taxation if they qualify as a Luxembourg tax resident or have Luxembourg-source employment income. For Luxembourg tax purposes, an individual is considered resident in Luxembourg if they have their domicile or permanent home in Luxembourg. Non-resident employees are taxed in Luxembourg on Luxembourg-source employment income (eg, work physically performed in Luxembourg), subject to applicable double tax treaties.

Employment income is subject to progressive personal income tax, withheld at source via payroll withholding (retenue d’impôt sur salaires). The applicable progressive scale varies from 0% up to 42%. However, taking into consideration the solidarity surcharge, the effective maximum marginal rate applicable is of approximately 45% (ie, 42% base rate + 7% solidarity surcharge) for high income brackets.

Taxable income includes salary and bonuses as well as benefits in kind (eg, company car, stock options under conditions), less social security contributions and certain allowances and deductions.

Employees must contribute to Luxembourg social security, which covers pension, health, accident insurance and dependency insurance.

Approximate employee contributions(on gross salary up to a cap for some items) are:

• pension insurance: ~8%;
• health insurance: ~3.05%; and
• dependency insurance (assurance dépendance): ~1.4% (on adjusted base).

Total employee contributions amount to approximately 12%–13% of the gross salary. These contributions are withheld directly by the employer.

Employers must also pay additional contributions on top of gross salary. Approximate employer contributions are:

• pension insurance: ~8%;
• health insurance: ~3.05%;
• accident insurance: ~0.5%–1.5% (rate depends on sector risk); and
• health at work/mutual insurance scheme: ~1%.

Total employer contributions amount to approximately 12%–15% of gross salary. These contributions can vary slightly depending on the employee’s status and the employer’s risk category.

Social security contributions are capped to a gross remuneration of EUR13,518.68. This cap is revised regularly based on minimal wage indices.

Employers must:

• withhold income tax at source;
• withhold employee social contributions;
• pay both employee and employer social contributions to the Centre Commun de la Sécurité Sociale (CCSS); and
• file monthly/annual payroll reports.

To be subject to taxation in Luxembourg, a company must be considered as tax resident in Luxembourg or receive certain Luxembourg sourced-income. In the first scenario, the company is taxable on its worldwide income; in the second one, only the Luxembourg sourced-income is taxable.

An entity is considered Luxembourg-resident if:

• it is incorporated in Luxembourg; or
• its place of effective management (central administration) is located in Luxembourg. Effective management includes where strategic decisions are made, board meetings held, and senior management operates.

Corporate Income Tax (CIT) and Municipal Business Tax (MBT)

The ordinary CIT rate applicable to resident and non-resident collective entities in 2026 is:

• 14% for taxable income not exceeding EUR175,000;
• EUR24,500 plus 30% of the income exceeding EUR175,000 for taxable income between EUR175,000 and EUR200,001; and
• 16% for taxable income exceeding EUR200,000.

CIT applies only to corporate entities listed in Article 159 of the Income Tax Law and does not apply to tax-transparent entities (eg, general or limited partnerships or European economic interest groupings unless they are subject to reverse hybrid rules).

To CIT rate, the following must be added.

• Solidarity surcharge: 7% of CIT for the year 2026 – bringing the aggregate CIT rate to 17.12% (16% rate + (7% x 16%)) for the year 2026 for collective entities whose taxable income is above EUR200,000.
• Municipal Business Tax (MBT): rate varies by municipality, approximately 6.75% in Luxembourg City.

Net Wealth Tax (NWT)

NWT applies to resident companies (subject to exemptions for certain holding companies). NWT is a state tax levied on the net wealth of companies, charged on their worldwide so-called “unitary value” (generally equal to the net asset value of the company or branch – subject to certain exemptions and adjustments).

The NWT rate is 0.5% on that part of the net wealth which is lower or equal to EUR500 million and 0.05% on that part of the net wealth exceeding EUR500 million. A reduction of the NWT can be requested by an entity in its CIT tax return, provided that it undertakes to enter, before the end of the following year, an amount equivalent to five times the reduction requested in a reserve account and to maintain this reserve in its balance sheet for a five-year period.

Luxembourg companies are subject to the higher of either the NWT as per the unitary value or a minimum NWT varying between EUR535 and EUR4,815.

Since 2025, the amount of minimum NWT is computed as follows:

• a minimum NWT of EUR535 where the total balance sheet is less than or equal to EUR350,000;
• a minimum NWT of EUR1,605 where the total balance sheet is greater than EUR350,000 and less than or equal to EUR2 million; or
• a minimum NWT of EUR4,815 where the balance sheet total is greater than EUR2 million.

Withholding Taxes

As a general rule, Luxembourg does not levy withholding tax on the following outbound amounts paid, credited or otherwise made available by Luxembourg corporate taxpayers to non‑residents:

• ordinary interest paid at arm’s length;
• royalties;
• liquidation proceeds; and
• dividend distributions made by exempt undertakings for collective investment.

Dividends distributed by Luxembourg‑resident companies are, in principle, subject to a 15% withholding tax. However, subject to the General Anti‑Avoidance Rule (GAAR), a withholding tax exemption may apply where dividends are paid by a fully taxable Luxembourg resident company to:

• a non‑resident collective entity falling within the scope of the EU Parent–Subsidiary Directive;
• a Swiss‑resident corporation subject to Swiss corporate tax and not benefiting from a Swiss tax exemption;
• a corporation or co-operative resident in an EEA country (other than an EU member state) and fully subject to an income tax comparable to Luxembourg CIT;
• a collective undertaking resident in a tax treaty jurisdiction and fully subject to an income tax comparable to Luxembourg CIT; or
• a Luxembourg permanent establishment of any of the above qualifying foreign entities.

The exemption applies where the parent company has held or commits to hold – directly or indirectly through a tax‑transparent entity – at least 10% of the share capital or a participation with an acquisition cost of at least EUR1.2 million, for an uninterrupted period of at least 12 months.

A 20% withholding tax applies to directors’ fees (increased to 25% if the tax is borne by the company paying the fees). For non‑resident directors whose Luxembourg‑source professional income consists solely of directors’ fees not exceeding EUR100,000 per fiscal year, the withholding tax constitutes the final tax, unless the director opts for assessment.

A 10% withholding tax applies to income from independent literary or artistic activities and from professional sports activities performed in Luxembourg.

Value Added Taxes (VAT)

In Luxembourg, VAT applies to supplies of goods and services, to intra‑Community acquisitions made by taxable persons in the course of their business, and to imports from outside the EU. The standard VAT rate is 17%. A taxable person is anyone who independently and regularly carries out an economic activity.

Luxembourg also applies several reduced rates. An intermediate rate of 14% applies to items such as fuels, certain advertising publications, and services relating to the administration or custody of securities. A reduced rate of 8% applies to gas, electricity and, under certain conditions, works of art and their supply. A super‑reduced rate of 3% covers a wide range of goods and services, including broadcasting services, copyrights, most food products, books and periodicals, children’s clothing, water, pharmaceuticals, passenger transport, accommodation, and access to cultural, educational, sporting, entertainment events and e‑books.

Finally, a zero rate applies principally to exports and intra‑Community (interstate) supplies of goods.

Registration Duties

In Luxembourg, registration duties vary depending on the type of transaction or document. Transfers of Luxembourg real estate generally trigger a registration tax of 6% (increasing to 9% for certain properties in Luxembourg City), plus a 1% transcription tax, calculated on the higher of the purchase price or the property’s fair market value. These taxes are deductible for corporate income tax purposes.

Certain corporate-law formalities – such as the incorporation of a Luxembourg entity, amendments to its articles of association, or the transfer of its registered seat to Luxembourg – are subject to a fixed registration duty of EUR75.

When real estate is contributed to a company in exchange for shares, the contribution is subject to a proportional registration duty of 0.6% (or 0.9% for some Luxembourg City properties), plus a 0.5% transcription tax. If the consideration consists of something other than shares, the proportional duty increases to 6% (or 9% in Luxembourg City), and the transcription tax to 1%. Certain reorganisations may benefit from exemptions from proportional duties.

Contributions of movable property remunerated by means other than shares are also subject to a proportional registration duty, with the applicable rate depending on the nature of the assets contributed.

Top-Up Tax Under Pillar Two

Luxembourg transposed the EU Pillar Two Directive on global minimum taxation in December 2023. As a result, Pillar Two is now in force, with the Income Inclusion Rule (IIR) and the Luxembourg Qualified Domestic Minimum Top‑Up Tax (QDMTT) applying for fiscal years beginning on or after 31 December 2023, and the Undertaxed Profits Rule (UTPR) applying for fiscal years beginning on or after 31 December 2024.

Luxembourg has been granted safe harbour status on the OECD’s central record.

Luxembourg’s tax framework contains multiple incentives tailored to specific transaction types.

Participation Exemption

Under the participation exemption, dividends received from a foreign subsidiary can be exempt if the following conditions are met.

• The distributing subsidiary must be:
1. an EU company covered by the Parent–Subsidiary Directive; or
2. a fully taxable Luxembourg company; or
3. a non‑resident joint stock company fully liable to a tax comparable to Luxembourg CIT (generally at least 8% as of tax year 2025).
• The Luxembourg parent company must be a fully taxable resident company (or qualifying PE).
• The participation must satisfy a minimum threshold of:
1. at least 10% of the subsidiary’s share capital; or
2. acquisition cost of at least EUR1.2 million for dividend exemption.
• Minimum holding period: the parent must hold or commit to hold the participation for at least 12 months.

If these conditions are met, the dividend is fully exempt from Luxembourg corporate income tax.

If dividends received by a Luxembourg company do not meet the conditions for the full participation exemption, 50% of the dividend is nevertheless exempt from CIT under Luxembourg’s domestic half‑income method, provided the income is paid by:

• a fully taxable Luxembourg resident company;
• a company resident in a state with which Luxembourg has concluded a double tax treaty and which is fully liable to a tax corresponding to Luxembourg CIT; or
• a company resident in an EU member state covered by Article 2 of the EU Parent–Subsidiary Directive (Directive 2011/96/EU).

Capital Gains Exemption

Capital gains realised by a Luxembourg company or permanent establishment on the disposal of shares in a subsidiary can also be exempt from tax where, at the time the gain arises, the seller has held – or commits to hold for at least 12 uninterrupted months – a direct and continuous participation of at least 10% in the subsidiary or shares with an acquisition cost of at least EUR6 million. The subsidiary must be either an EU undertaking covered by the Parent–Subsidiary Directive, a fully taxable Luxembourg capital company, or a non‑resident company subject to a tax comparable to Luxembourg corporate income tax. In practice, the Luxembourg tax authorities generally require that the foreign company be subject to a minimum tax rate of 8% on a basis comparable to Luxembourg’s.

Waiver Under LITL Article 166

As from tax year 2025, the Luxembourg tax law provides, in Article 166 of the Luxembourg Income Tax Law (LITL), for the possibility for a taxpayer to waive the benefit of the Luxembourg participation exemption referred to in Article 166 of the LITL. However, this option is only available to the taxpayer where the conditions for the participation exemption are met solely by virtue of the threshold of the acquisition price of the shareholding, ie, if is at least equal to an amount of EUR1.2 million. In other words, when the conditions for the exemption are met on the basis of a shareholding of at least 10%, it is not possible to exercise this waiver. The limitation of the waiver to these cases is due to the constraints arising from the Parent–Subsidiary Directive. The waiver must be exercised individually for each tax year and for each shareholding and has an impact on the recapture rule. If the waiver is not exercised, the participation exemption continues to apply normally.

Innovation‑Driven Activities

Luxembourg offers targeted incentives for innovation‑driven activities.

• Research and development (R&D) expenses are generally tax deductible. Since 1 January 2018, Luxembourg has implemented an intellectual property (IP) regime that complies with the “modified nexus” approach endorsed by both the OECD and the European Union as part of the Base Erosion and Profit Shifting (BEPS) project. Under this regime, an 80% exemption from CIT and MBT may apply – subject to certain conditions – to the net income derived from qualifying rights in patents (defined broadly) and copyrighted software. The exemption is limited to IP assets that are not marketing‑related and that were created, developed or enhanced after 31 December 2007, provided the income originates from eligible R&D activities. In addition, IP assets that qualify for the 80% (corporate) income tax exemption are 100% exempt from net wealth tax.
• In addition to the IP regime, the law on 19 December 2023 introduced a major reform of the investment tax credit (ITC) framework, effective as from the 2024 tax year. This framework aims to accelerate the digital transformation as well as the ecological and energy transition of Luxembourg businesses and to strengthen the competitiveness of Luxembourg companies, by stimulating more innovation, while promoting the development of knowledge and skills in digital transformation and ecological and energy transition. The framework provides for the following:
1. a global ITC of 12% based on the acquisition price or cost price of investments made during a financial year, granted on investments in tangible depreciable assets other than buildings, livestock and mineral and fossil deposits, and for the acquisition of software;
2. for investments in fixed assets approved to be eligible for the special depreciation referred to in Article 32bis of the LITL, the tax credit is increased to 14%; and
3. a specific income tax credit for investments and operating expenses linked to the digital transformation or ecological and energy transition – the rate of the new tax credit is either 18% or 6% depending on whether investments are made in tangible depreciable assets or not.

Specific Industries

Luxembourg’s tax framework also contains multiple incentives tailored to specific industries. For that purpose, Luxembourg offers a wide range of investment vehicles, some of which benefit from a tax regime which differs from that applicable to fully taxable corporate entities. The following regulated investment funds are exempt from any taxation on their income, but are subject to a so-called “subscription tax” on the value of their net assets:

• undertakings for collective investment in transferable securities (UCITS) within the meaning of the UCITS Directive;
• alternative investment funds (AIFs) (ie, undertakings for collective investment which are not UCITS); and
• specialised investment funds (SIFs), which are multi-purpose investment funds dedicated to so-called “sophisticated investors”.

While the income exemption applies in the same way to all investment fund types listed above, the rate of subscription tax varies depending on the type of fund, from 0.01% to 0.05%. Some subscription tax exemptions apply in certain cases. Notably, actively managed exchange traded funds are exempted from subscription tax with effect as from 1 January 2025, aligning to the regime already applicable to passively managed exchange traded funds.

Securitisation vehicles (SVs) set up as a securitisation fund (which acquires or assumes, directly or through another undertaking, risks relating to claims, other assets or obligations assumed by third parties or inherent to all or part of the activities of third parties and issues securities whose value or yield depends on such risks) are exempt from taxation on their income and are subject to the tax provisions applicable to UCIs. However, they are not subject to subscription tax.

Some other types of investment vehicles are fully subject to tax on their income as any other fully taxable Luxembourg corporate entity, but either benefit from certain exemptions on certain income categories (sociétés d’investissement en capital à risque (SICARs)) or are subject to specific rules when computing their tax base (SVs in corporate form):

• an investment company in risk capital (SICAR), designed for private equity and venture capital investments, must invest its assets in securities representing risk capital; and
• an SV set up as a corporation (same activity as a securitisation fund) is fully subject to tax on its income like any other fully taxable Luxembourg corporate entity, but is subject to specific rules (specific deductions) when determining its taxable income.

Finally, the reserved alternative investment fund (RAIF) combines the characteristics and structuring flexibilities of both the Luxembourg regulated SIF and the SICAR qualifying as an AIF managed by an authorised AIF manager (AIFM), except that RAIFs are not subject to prior authorisation from the Luxembourg financial regulator as they must be managed by a fully authorised AIFM. For tax purposes, depending on the activity they perform, RAIFs are subject to either the same income tax exemption regime as SIFs (and subscription tax) or the same tax regime as SICARs.

Fiscal consolidation is permitted for CIT and MBT purposes, but not for NWT. Luxembourg law allows groups to elect either vertical or horizontal tax consolidation, with the consolidated group being bound by the regime for a minimum period of five years. A company may not simultaneously belong to more than one tax‑consolidated group.

Vertical tax consolidation is available where a fully taxable Luxembourg resident company, or the Luxembourg permanent establishment of a foreign company subject to a tax comparable to Luxembourg CIT, directly or indirectly holds at least 95% of the share capital of one or more fully taxable Luxembourg resident companies, or of a Luxembourg permanent establishment of a foreign entity subject to a comparable tax. Both the integrating parent and the integrated subsidiaries must have the same financial year‑end.

Horizontal tax consolidation applies where several subsidiaries are held, directly or indirectly, at a minimum of 95% by the same non‑integrated parent entity. The integrating and integrated entities may be fully taxable Luxembourg companies or Luxembourg permanent establishments of foreign companies subject to a tax comparable to Luxembourg CIT. The non‑integrated parent may be a fully taxable Luxembourg company, a Luxembourg permanent establishment of a foreign company, a foreign company resident in an EEA member state and subject to a comparable tax, or a permanent establishment located in an EEA member state of such a foreign company. Even though the parent is not part of the consolidation, the 95% shareholding requirement must still be met. All integrating and integrated entities must share the same financial year‑end.

Where the 95% shareholding is held indirectly, all intermediary companies must themselves be corporate entities fully subject to a tax comparable to Luxembourg CIT.

Tax consolidation takes effect only upon written request to the Luxembourg tax authorities and applies retrospectively from the start of the fiscal year in which the request is filed. Once elected, the regime must be maintained for at least five tax years.

In the absence of statutory thin‑capitalisation rules under Luxembourg tax law, the principles set out in Chapter X of the OECD Transfer Pricing Guidelines on financial transactions, released on 11 February 2020, serve as the primary reference point. Consequently, a Luxembourg company’s debt‑to‑equity ratio must, in practice, be supported by a debt‑capacity analysis carried out as part of a transfer pricing assessment. Where the level of indebtedness is considered excessive, related interest payments may be recharacterised as hidden profit distributions, resulting in the denial of the tax deduction and potentially triggering Luxembourg dividend withholding tax.

Historically, the commonly used 85%/15% debt‑to‑equity ratio for shareholding activities has not been systematically challenged, although the Luxembourg tax authorities have, in certain cases, requested formal debt‑capacity analyses. More recently, however, the Administrative Court has clarified that this 85/15 practice does not have any legally binding force.

Luxembourg’s transfer pricing framework is anchored in Article 56 of the Income Tax Law, which empowers the tax authorities to adjust a company’s taxable income when transactions between associated enterprises diverge from arm’s length conditions. This may lead to an upward adjustment where a Luxembourg entity confers an undue advantage on a related party – for example, by paying interest at a rate above arm’s length – or, conversely, to a downward adjustment where the Luxembourg entity is the beneficiary of such an advantage.

Separately, Article 164(3) of the Income Tax Law provides that hidden dividend distributions – meaning benefits granted to a shareholder that would not have been provided absent the shareholding relationship, such as interest charged at a rate above arm’s length – are not deductible for tax purposes. These rules governing hidden distributions operate alongside the transfer pricing framework and may, in certain cases, take precedence over arm’s length adjustments.

Luxembourg rarely challenges the application of tax treaties. Nonetheless, domestic legislation includes a general anti‑abuse rule (GAAR), as well as the anti‑abuse provision of the EU Parent–Subsidiary Directive, under which treaty or directive benefits may be denied when an arrangement is primarily designed to obtain a tax advantage.

Since 1 January 2019, Luxembourg’s domestic GAAR has been aligned with the wording of ATAD 1, introducing the concept of a “non‑genuine arrangement”. Under this rule, a transaction may be disregarded or recharacterised when all of the following conditions are met:

• the arrangement involves the use of one or more legal forms or legal structures;
• the main purpose, or one of the main purposes, of using such legal forms or structures is to obtain a tax benefit that defeats the object or purpose of the applicable tax law; and
• the use of such forms or structures is considered non‑genuine.

These principles are further reinforced by Luxembourg’s substance‑over‑form doctrine, under which the tax analysis focuses on the economic reality of a structure or transaction rather than its legal form. This doctrine is embedded in Luxembourg legislation and case law and remains a central interpretative tool for the tax authorities and courts.

In addition, since 1 January 2020, the principal purpose test (PPT) has applied to Luxembourg’s tax treaties. Under the PPT, treaty benefits may be denied if it is reasonable to conclude that obtaining the benefit was one of the principal purposes of an arrangement or transaction that directly or indirectly gave rise to that advantage.

In addition, Luxembourg applies the full EU anti‑hybrid mismatch rules, which deny tax deductions or other advantages in circumstances involving double deductions or deduction‑without‑inclusion outcomes, ensuring consistency with the ATAD 2 framework.

The Luxembourg hybrid mismatch rules follow OECD BEPS Action 2 recommendations and target a wide range of hybrid mismatch scenarios, including:

• hybrid financial instruments (equity in one jurisdiction, debt in another);
• hybrid entities (transparent vs opaque treatment);
• hybrid permanent establishments;
• imported hybrid mismatches (mismatches arising outside Luxembourg but imported via deductions);
• hybrid transfers;
• dual‑resident entities; and
• reverse hybrids (transparent in Luxembourg, opaque to investors).

Hybrid mismatches arise when entities or instruments are treated differently across jurisdictions, leading to outcomes such as double deductions or deductions without inclusion. ATAD 2 requires EU member states – such as Luxembourg – to neutralise these mismatches either by denying deductions or by including otherwise untaxed income.

Luxembourg’s implementation strictly adheres to ATAD 2 minimum standards, without adding extra layers of complexity, but opting into all permitted exemptions or safe harbours to avoid unintended double taxation.

Under Article 38 of the Luxembourg Income Tax Law (LITL), exit taxation is triggered where Luxembourg loses, in whole or in part, its taxing rights over assets or business activities as a result of a cross-border transfer. This may arise, in particular, where:

• assets are transferred from a Luxembourg head office to a foreign permanent establishment;
• assets are transferred from a Luxembourg permanent establishment to its foreign head office or to another foreign permanent establishment;
• a taxpayer transfers its tax residence outside Luxembourg; or
• a business carried on through a Luxembourg permanent establishment is transferred to another jurisdiction,

provided that, as a consequence of the transfer, Luxembourg no longer has the right to tax any future gains realised on the relevant assets.

Upon the occurrence of an exit event, unrealised gains inherent in the transferred assets are deemed to be realised for Luxembourg tax purposes. The taxable gain generally corresponds to the difference between:

• the fair market value (or going concern value) of the assets at the date of the transfer; and
• their tax book value for Luxembourg tax purposes.

Accordingly, gains that accrued while the assets were subject to Luxembourg taxation become taxable at the time of the transfer, notwithstanding the absence of an actual disposal.

Where the transfer is made to another European Union member state or to a qualifying European Economic Area State with which arrangements for the mutual recovery of tax claims are in place, the taxpayer may elect to defer payment of the exit tax by paying it in equal instalments over a period of up to five years.

The benefit of the instalment regime may be withdrawn and the outstanding tax liability become immediately payable in certain circumstances, including where the transferred assets are subsequently disposed of or transferred to a non-qualifying jurisdiction.

By contrast, where the transfer is made to a jurisdiction that does not qualify for the deferral regime, the exit tax is generally due immediately upon the occurrence of the exit event.

Luxembourg does not maintain an independent national tariff regime. As a member of the European Union (EU) and the EU Customs Union, Luxembourg applies the EU Common Customs Tariff (CCT) to goods imported from non-EU countries. Goods moving between EU member states circulate free of customs duties, while imports from outside the EU are subject to the tariff rates and trade measures established at EU level.

Luxembourg does not currently operate a general ex ante merger control regime. Consequently, mergers, acquisitions and joint ventures are not subject to mandatory notification or prior approval by the Luxembourg competition authorities under national competition law. As a general rule, therefore, M&A transactions are not reportable in Luxembourg on the basis of turnover or market share thresholds.

Notwithstanding the absence of a national merger control system, certain transactions may nevertheless be subject to regulatory review at the European Union level. In particular, concentrations, including mergers, acquisitions of control and certain full-function joint ventures, fall within the scope of the EU Merger Regulation where the applicable jurisdictional thresholds are met. Transactions meeting those thresholds must be notified to and cleared by the European Commission prior to implementation.

Furthermore, although no prior notification is currently required at the national level, the Luxembourg Competition Authority retains the ability to intervene on an ex post basis where a transaction gives rise to competition concerns, including potential abuses of a dominant position or other anti-competitive effects.

It should also be noted that a draft bill proposing the introduction of a Luxembourg merger control regime is currently under consideration. The proposal would establish a system of mandatory pre-closing notification for transactions meeting specified turnover thresholds, including where the parties’ combined turnover in Luxembourg exceeds EUR60 million and at least two parties each generate Luxembourg turnover exceeding EUR15 million. However, the proposed legislation has been subject to criticism and has not yet been adopted. Accordingly, the timing of its entry into force and the final form of the regime remain uncertain.

Luxembourg does not currently have a national ex ante merger control regime. As a consequence, there are no national rules describing the steps or timing of merger notifications.

Luxembourg has a framework addressing economic and anti‑competitive conduct, as part of its broader system governing economic crimes and market regulation. These are governed by a combination of the Luxembourg Criminal Code, and EU-derived regulations, such as the Market Abuse Regulation. This indicates that Luxembourg’s system is strongly influenced by EU law, including in areas relating to competition and market conduct.

Economic offences include:

• fraud;
• market abuse and insider trading; and
• other forms of unlawful conduct affecting markets.

Luxembourg does have rules governing unilateral conduct and, in particular, abuse of economic dependence, though the framework is somewhat limited and closely aligned with EU competition law.

Luxembourg competition law is primarily based on the Luxembourg Competition Act (Law of 23 October 2011, as amended). As Luxembourg is an EU member state, national courts must interpret domestic law in a manner compliant with EU law. This implies that EU competition law principles (including Articles 101 and 102 TFEU) are relevant in Luxembourg, and the legal framework follows an effects-based approach, where conduct may be assessed in light of its impact within the EU, even if carried out elsewhere.

Article 5 of the Luxembourg Competition Act prohibits abuse of a dominant position. This mirrors Article 102 TFEU and covers unilateral conduct such as:

• unfair pricing;
• exclusionary practices;
• refusal to supply; and
• discriminatory conditions.

This requires market dominance (not just strong bargaining power).

Luxembourg authorities (eg, the Competition Authority) may act ex post in competition matters, including intervention in cases of abuse of dominance.

In relation to the concept of abuse of economic dependence, Luxembourg does recognise the concept, but it is not as fully developed or codified as in some neighbouring countries (eg, France or Belgium). Abuse of economic dependence is addressed more indirectly, via:

• general civil law principles;
• unfair competition rules; and
• contract law (good faith, imbalance, abuse of rights).

Definition

A patent is an industrial property right granted by the Luxembourg Ministry of the Economy that provides legal protection for inventions that are new, involve an inventive step and are capable of industrial application. Patent protection is also available for certain biotechnological inventions. A patent confers on its holder an exclusive right to exploit the invention and to prevent third parties from manufacturing, using, marketing, distributing or selling the patented invention without prior authorisation.

To qualify for patent protection, an invention must:

• be novel, meaning that it does not form part of the state of the art;
• involve an inventive step, such that it is not obvious to a person skilled in the relevant field;
• be capable of industrial application; and
• not fall within any category expressly excluded from patentability.

Registration Process

To obtain a patent, full disclosure of the invention is mandatory. A patent application must include a sufficiently clear and complete description of the invention, together with any necessary drawings, enabling a person skilled in the relevant field to reproduce the invention. It must also contain one or more claims defining the scope of the protection sought, which may relate to a product, process, device or specific use. In addition, the applicant must pay the applicable filing and procedural fees required for the grant of the patent.

In exchange for this disclosure, a patent grants its holder exclusive rights for a maximum period of 20 years from the filing date of the patent application, subject to compliance with any applicable maintenance requirements.

The right to a patent belongs to the inventor or their successor in title (any person who has acquired the right from the inventor). Any natural or legal person may apply for a patent.

An application for a Luxembourg national patent must be filed with the Intellectual Property Office (Office de la propriété intellectuelle – OPI) of the Ministry of the Economy.

In addition to national protection, applicants may seek broader territorial coverage through:

• European patent applications filed with the European Patent Office (EPO), which can provide protection in multiple European countries through a centralised application procedure; and
• international patent applications filed under the Patent Cooperation Treaty (PCT) administered by the World Intellectual Property Organization (WIPO).

The patent is valid in the countries where such protection has been requested. An applicant who first files a patent application in Luxembourg benefits from a 12‑month priority period, during which corresponding applications may be filed in other jurisdictions while preserving the original filing date.

The filing of a Luxembourg patent application is subject to prescribed fees, including a filing fee of EUR40, payable within one month of filing, and, where requested, a search fee of EUR450 for the preparation of a search report. Applicants may also request early publication of the patent application to accelerate the grant process, subject to payment of an additional EUR49 fee. Following grant, the patent remains in force only if the applicable annual renewal fees are paid.

Enforcement and Remedies

The owner of a patent, or, where the owner fails to act, a licensee entitled to use the patent, may bring infringement proceedings before the Luxembourg courts. Where infringement is established, the Luxembourg District Court may grant a range of remedies, including:

• injunctive relief to prevent or cease the infringing activities;
• confiscation or destruction of infringing goods; and
• an award of damages to compensate the patent holder for losses suffered as a result of the infringement.

These remedies are intended both to halt unlawful use of the patented invention and to compensate the rights holder for the harm caused by the infringement.

Definition

A trade mark is a distinctive sign used to identify and distinguish the goods or services of one undertaking from those of another. It serves as an indicator of commercial origin and may take various forms, including word marks, figurative marks, combined word and figurative marks, and three-dimensional marks.

Registration Process

Any sign capable of being represented in a manner that enables the competent authorities and the public to determine clearly and precisely the subject matter of protection may qualify for registration, provided that it is capable of distinguishing the goods or services of one undertaking from those of another. Eligible signs include, among others:

• words;
• slogans;
• letters;
• numbers;
• drawings;
• shapes;
• colours;
• sounds; and
• combinations thereof.

However, a trade mark will be denied registration, or may subsequently be declared invalid, if it lacks distinctive character, is contrary to public policy or accepted principles of morality, is misleading as to the nature, quality or origin of the relevant goods or services, cannot function as a trade mark, or conflicts with an earlier registered trade mark or other prior right.

A trade mark may be registered by any natural or legal person, including individuals, self-employed persons, companies and other entities. Upon registration, the proprietor obtains the exclusive right to use the trade mark in relation to the goods and services for which it is registered.

The owner of a registered trade mark enjoys the exclusive right to use the mark and may prevent third parties from using identical or similar signs that are likely to cause confusion among consumers. Protection may also extend to the use of identical or similar signs that take unfair advantage of, or are detrimental to, the reputation or distinctive character of a well-known trade mark.

In principle, trade mark rights arise through registration. Unregistered trade marks do not generally benefit from protection, except in limited circumstances relating to well-known marks. A trade mark is generally protected for a period of ten years from the filing date. Registration may be renewed indefinitely for successive ten-year periods, provided that the applicable renewal requirements and fees are satisfied.

Luxembourg does not have a national trade mark protection scheme. Trade mark protection in Luxembourg is governed by the EU Trade Mark Regulation (EU) 2017/1001 and the Benelux Convention on Intellectual Property. Applications may be filed with the Benelux Office for Intellectual Property (BOIP) or through the relevant national authority, which in Luxembourg is the Intellectual Property Division of the Ministry of the Economy. Trade mark protection obtained through a Benelux registration extends automatically to Belgium, the Netherlands and Luxembourg.

Businesses seeking broader protection across the European Union may apply for an EU Trade Mark (EUTM), which provides unitary protection throughout all EU member states.

The trade mark registration process typically takes approximately four months for Benelux registrations, nine to ten months for EU trade marks, and between four and 24 months for international registrations, depending on the jurisdictions concerned. Once registered, trade mark protection takes effect retroactively from the filing date, which therefore constitutes a key element of the registration process.

The official filing fees for trade mark registration vary depending on the territorial scope of protection. The standard fee for a Benelux trade mark covering up to three classes is EUR240, while the registration of an EU trade mark covering three classes generally costs between EUR900 and EUR1,050. For international trade mark registrations, applicants pay a single set of fees to the World Intellectual Property Organization (WIPO).

The applicable registration fees must be paid within one month of the filing date. Failure to do so will result in the date of receipt of payment being deemed the filing date of the application. As the filing date determines the priority of trade mark rights and their precedence over subsequent applications, timely payment is of particular importance.

Enforcement and Remedies

Trade mark owners may enforce their rights through administrative or judicial proceedings.

At the administrative level, the proprietor of an earlier trade mark may initiate opposition proceedings before the BOIP against a later-filed mark that infringes its rights. The BOIP may also hear applications for the revocation or declaration of invalidity of registered trade marks on specified grounds. Appeals against BOIP decisions fall within the exclusive jurisdiction of the Benelux Court of Justice.

At the judicial level, trade mark owners may bring infringement proceedings before the Luxembourg District Court. In urgent cases, the trade mark owner may also seek interim injunctive relief through summary proceedings before the President of the Luxembourg District Court in order to prevent or stop ongoing infringement.

Definition

An industrial design (or drawing and design) is the visual appearance of a product, including its shape, lines, contours, colours, texture, materials or ornamentation, provided that these features are aesthetic rather than purely functional in nature. Drawings relate to two-dimensional representations, while designs generally concern three-dimensional objects.

Registration

Ownership and exploitation rights in a drawing or design may be exercised either by its creator or by any person or entity that has lawfully acquired such rights.

To qualify for protection, a design must:

• relate to the appearance of an industrial or handicraft product, or part thereof;
• be new;
• possess individual character, creating a different overall impression on the informed user; and
• derive from the product’s visual features rather than its technical function.

Purely functional features, as well as immaterial concepts or ideas, are not eligible for protection.

Design protection may be obtained through either:

• a single design application covering one design; or
• a multiple design application covering several designs falling within the same class under the International Classification for Industrial Designs.

In the Benelux region, design registration provides protection in Belgium, Luxembourg and the Netherlands, as national registrations no longer exist separately. Applicants seeking broader protection may apply for a Registered Community Design, which affords protection throughout the European Union. Where protection is required beyond the EU, applications may be filed through the World Intellectual Property Organization (WIPO) under the international design registration system.

At Luxembourg level, registering a simple drawing or design costs EUR108 plus EUR10 per representation (photo, illustration, etc). At European level, a single application is subject to a fee of EUR350.

A registered design grants its holder an exclusive right to use the design and to prevent unauthorised use of identical or substantially similar designs. Registered designs benefit from an initial protection period of five years from the filing date, which may be renewed in successive five-year periods up to a maximum term of 25 years.

Enforcement and Remedies

The holder of a registered design may enforce its rights before the Luxembourg District Court. In urgent circumstances, the design holder may also seek interim relief through summary proceedings before the President of the Luxembourg District Court, including injunctions aimed at preventing or immediately stopping infringement.

Under the Community Designs Regulation, an unregistered design that has been made available to the public within the European Union benefits from protection for three years from the date of first disclosure.

EU law also provides limited protection (for three years from the date of first disclosure) for unregistered designs that have been disclosed to the public within the European Union. Unlike registered designs, the holder of an unregistered design may only prevent use that results from the copying of the protected design. Registration therefore offers significantly broader protection, as it enables the holder to prohibit unauthorised use irrespective of whether copying can be demonstrated.

The enforcement mechanisms and remedies available for unregistered designs are substantially the same as those applicable to registered designs.

Definition

Copyright is the legal protection granted to the creator of an original literary, scientific or artistic work. In Luxembourg, copyright is governed by the Act of 18 April 2001 on Copyright, Related Rights and Databases, as amended.

Copyright protection applies to original works that reflect the author’s own intellectual creation and have been expressed in a tangible or identifiable form. Protected works include, among others:

• literary works;
• artistic creations;
• computer programs; and
• databases.

Mere ideas, concepts or methods are not protected.

Protection

Copyright protection arises automatically upon the creation of an original work and is not subject to any registration or other formality. The author acquires exclusive rights in the work from the moment of its creation, enabling them to control its use and exploitation by third parties.

Although registration is not required, it is advisable to retain evidence establishing the date of creation of the work. Such evidence may be provided by any appropriate means, including an i-DEPOT registration with the Benelux Office for Intellectual Property, the deposit of a copy of the work with a notary or financial institution, or other reliable methods capable of demonstrating the existence of the work at a specified date. The copyright holder enjoys exclusive rights over the work, including the following:

• to authorise or prohibit its reproduction;
• communication to the public;
• distribution; and
• modification.

These rights enable the author to control the use of the work and to prevent unauthorised exploitation by third parties.

Copyright protection subsists for the lifetime of the author and for 70 years following the author’s death. Upon the author’s death, the rights pass to their heirs or other successors in title. Copyright may also be transferred or licensed, in whole or in part, to third parties.

Enforcement and Remedies

Copyright holders may bring civil proceedings to enforce their rights against unauthorised use of their works. In addition to civil remedies, Luxembourg law provides for criminal sanctions where copyright infringement is committed in the course of trade with malicious or fraudulent intent. Unauthorised reproduction or distribution of protected works may constitute the criminal offence of counterfeiting and may result in:

• fines of up to EUR250,000;
• confiscation or destruction of counterfeit goods; and
• in cases of repeated infringement, imprisonment for up to two years.

These remedies are intended both to compensate rights-holders and to deter unlawful exploitation of protected works.

Trade Secrets

Trade secrets benefit from specific legal protection under the Luxembourg Act of 26 June 2019 on the protection of trade secrets, which implements the EU Trade Secrets Directive. This regime is particularly relevant for commercially valuable information that does not qualify for intellectual property protection or that a business prefers to keep confidential rather than register.

Protection arises automatically and does not require registration, provided that the information:

• is not generally known or readily accessible to persons operating in the relevant sector;
• has commercial value because of its confidential nature; and
• is subject to reasonable measures by the lawful holder to preserve its secrecy.

Protected information may include:

• technical know-how;
• business processes;
• customer lists;
• strategies;
• formulas; and
• other confidential business information.

Trade secret protection is not limited in time and may continue indefinitely, provided that the information remains confidential and retains its secret character. However, claims relating to unlawful acquisition, use or disclosure must generally be brought within two years of discovery of the infringement.

No registration, filing or other formality is required to obtain trade secret protection. Protection arises automatically once the statutory conditions for secrecy, commercial value and reasonable protective measures are met.

The holder of a trade secret may bring proceedings before the Luxembourg District Court against any person who unlawfully acquires, uses or discloses the protected information. Certain exceptions apply, notably where the acquisition, use or disclosure of the information is connected with the exercise of freedom of expression, whistle-blowing activities or the disclosure of unlawful conduct.

Other Related Rights

In addition to trade secret protection, Luxembourg law provides protection for other intangible assets, including software, databases, domain names and related rights granted to performers, phonogram producers and broadcasting organisations.

The processing of personal data in Luxembourg is principally governed by Regulation (EU) 2016/679 of 27 April 2016 (the General Data Protection Regulation, or GDPR), which has been directly applicable in all member states since 25 May 2018. The GDPR is supplemented by the Luxembourg law of 1 August 2018 on the organisation of the National Commission for Data Protection and the implementation of the GDPR, which specifies and gives effect to certain provisions of the Regulation, notably with respect to the structure, powers and enforcement functions of the National Commission for Data Protection (Commission nationale pour la protection des données – CNPD).

The Law of 1 August 2018 further establishes specific provisions applicable to particular categories of processing activities. These include the processing of special categories of personal data, notably health data, as well as processing undertaken for journalistic purposes and for scientific or historical research and statistical purposes. The law also regulates employee monitoring within the context of employment relationships, an area in which Luxembourg law provides for enhanced safeguards and specific compliance requirements.

In addition to the GDPR framework, the processing of personal data in the electronic communications sector is subject to supplementary obligations under the Luxembourg Act of 30 May 2005 on electronic communications, as amended. This legislation addresses, inter alia, the use of cookies and similar technologies, the confidentiality of communications, and direct marketing activities. At the European Union level, the proposed ePrivacy Regulation is expected to replace or further harmonise the existing national framework and, once adopted, would be directly applicable throughout the member states in a manner comparable to the GDPR.

More generally, Luxembourg’s data protection regime is founded upon the core principles established by the GDPR, including:

• lawfulness;
• fairness and transparency;
• purpose limitation;
• data minimisation;
• accuracy;
• storage limitation;
• integrity and confidentiality; and
• accountability.

While closely aligned with the European framework, the Luxembourg regime also reflects certain national particularities, especially in relation to employment-related processing and regulatory oversight. In this regard, the CNPD exercises active supervisory authority and is empowered to impose administrative fines, corrective measures and other enforcement actions in accordance with the GDPR and applicable national legislation.

Luxembourg data protection law follows the territorial and extraterritorial scope of the GDPR. Accordingly, the GDPR applies not only to processing activities carried out in the context of an establishment located in Luxembourg or elsewhere in the European Union, irrespective of where the processing itself takes place, but also to certain processing activities conducted by organisations established outside the EU.

In particular, entities with no EU establishment may nevertheless be subject to the GDPR where they offer goods or services to individuals located in the EU, including Luxembourg, or monitor the behaviour of such individuals, for example through online tracking, profiling or behavioural advertising. The decisive factor is the individual’s presence in the EU at the time of the processing, rather than their nationality or residence.

Where the GDPR applies, non-EU organisations must comply with the full range of applicable obligations, including:

• ensuring a lawful basis for processing;
• complying with transparency requirements;
• respecting data subject rights; and
• implementing appropriate technical and organisational security measures.

In certain circumstances, they may also be required to appoint a representative within the EU.

Furthermore, transfers of personal data outside the European Economic Area are subject to the GDPR’s international transfer regime and must be supported by an adequacy decision or other appropriate safeguards, such as standard contractual clauses.

From an enforcement perspective, cross-border processing may fall within the competence of the Luxembourg National Commission for Data Protection, particularly where Luxembourg constitutes the main establishment of a corporate group. The CNPD also co-operates with other European supervisory authorities under the GDPR’s one-stop-shop mechanism, enabling co-ordinated investigations and enforcement action across the EU, including against organisations established outside the Union.

In Luxembourg, the enforcement of data protection rules is entrusted to an independent supervisory authority: the Commission nationale pour la protection des données (CNPD). The CNPD is the national data protection authority established under Luxembourg law and responsible for ensuring the application of the GDPR and related national legislation. It operates as an independent administrative body. Its core mission is to monitor and enforce compliance with data protection rules. This includes:

• supervising how public authorities and private entities process personal data;
• advising the government and Parliament on data protection matters;
• issuing guidance, recommendations, and opinions; and
• handling complaints lodged by individuals and ensuring the exercise of their rights.

The CNPD is vested with extensive powers under the GDPR and Luxembourg law, which can be grouped into three main categories.

• Investigative powers – it may conduct inquiries, request information, carry out on-site inspections, and access relevant data and documentation.
• Corrective powers – it may order controllers or processors to comply with the law, impose temporary or definitive bans on processing, or require rectification or deletion of data.
• Sanctioning powers – it may impose administrative fines, which can reach up to EUR20 million or 4% of the undertaking’s worldwide annual turnover, depending on the seriousness of the infringement.

There is no applicable information in this jurisdiction.