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Interest, dividends and capital gains follow different rules in Luxembourg: a 20% final withholding on local interest, a 50% exemption on many dividends, and tax-free gains on shares held more than six months (below 10% ownership).
Do you have a savings account, some shares or investment funds? As a Luxembourg tax resident, your capital income is taxable in Luxembourg – but the regime is often gentler than elsewhere in Europe, provided you know the rules.
| Type of income | Tax treatment (residents) |
|---|---|
| Interest paid by a Luxembourg paying agent | Final 20% withholding (RELIBI law); exempt if total interest is under €250/year |
| Small amounts of interest | Exempt below the annual threshold set by the RELIBI law (€250 per person) |
| Dividends from Luxembourg companies | 15% withholding, creditable against your tax; 50% exemption for eligible dividends |
| Dividends from EU / treaty-country companies | Taxed at ordinary rates with the 50% exemption if conditions are met |
| Gains on securities held ≤ 6 months | Speculation profit, taxed at ordinary progressive rates |
| Gains on securities held > 6 months | Exempt, unless the shareholding is substantial (over 10%) |
For interest paid by a bank established in Luxembourg, the 20% withholding is final: the tax is definitively settled and this interest no longer appears in your return. For interest received abroad, an optional regime allows, under conditions, the same withholding to be applied voluntarily; otherwise it must be declared.
Eligible dividends (from fully taxable Luxembourg, EU or treaty-country companies) are taxed on only half of their amount. On top of that comes an annual allowance on total investment income (doubled for jointly taxed couples). The 15% withholding already deducted is credited against your final tax.
Reminder: assets held abroad remain taxable in Luxembourg for a resident. Tax treaties prevent double taxation but do not remove the duty to declare.
