Aurore Calvi
Managing Director of OmniTrust
Attracting international talent: Luxembourg’s expatriate tax regime
June 30, 2025
Luxembourg’s expatriate tax regime is the latest tool in the country’s strategy to attract top international talent in an increasingly competitive global market for skilled professionals. Strategically located in the heart of Europe and known for the stability of its economic and tax environment, Luxembourg is reinforcing its position with the introduction of a new version of the regime, effective from January 2025.
This measure offers a straightforward and advantageous tax framework for professionals recruited from abroad, while addressing the needs of companies facing a shortage of specific expertise. It is a valuable tool for competitiveness in an increasingly mobile world. Aurore Calvi, Managing Director at Kreston network member OmniTrust in Luxembourg, shares her insight.
1. Who qualifies as an expatriate employee?
An “expatriate employee” refers to an individual hired outside Luxembourg or seconded by a foreign entity to work in Luxembourg. Unlike cross-border workers who commute daily, expatriate employees relocate and become Luxembourg tax residents.
These highly qualified profiles play a crucial role in innovation, technological development, and the competitiveness of companies in key sectors such as finance, engineering, and research.
2. A new attractive tax regime since 2025
Main advantages:
· 50% exemption on annual gross salary, capped at €400,000 (excluding benefits in kind).
· Valid for up to 8 years, ensuring medium-term tax stability.
· Simplified administrative procedure, with no prior approval required; the employer initiates the process.
Eligibility criteria:
To qualify for the expatriate tax regime, several cumulative conditions must be met:
- Tax residency: The employee must become a tax resident of Luxembourg upon starting their role.
- No recent links to Luxembourg: The individual must not have been a tax resident or employed in Luxembourg during the five years before their arrival.
- Geographical distance: The employee must have lived more than 150 kilometres from the Luxembourg border during those five years.
- Minimum salary: Annual gross remuneration must be at least €75,000, excluding non-taxable elements.
- Work location: At least 75% of working time must be spent in Luxembourg.
- Company quota: No more than 30% of a company’s total staff can benefit from the regime.
3. A strategic tool for employers
This regime is a powerful recruitment tool for attracting international talent. It allows companies based in Luxembourg (or operating there) to offer attractive net compensation packages without increasing their overall labour cost. Its simplicity is an additional benefit, especially for multinational groups used to managing complex mobility processes. It also enables them to remain competitive compared to other European jurisdictions.
4. How does Luxembourg compare to its neighbours?
| Country | Duration | Main Tax Benefit | Key Conditions |
| Luxembourg | Up to 8 years | 50% exemption on gross salary (max €400,000) | Foreign hire, must become tax resident, lived >150km away |
| France | Up to 8 years | Partial exemption on expatriation-related income | Not tax resident in France during the prior 5 years |
| Belgium | 5 + 3 years | 30% exemption via specific allowance | No residency or activity in Belgium in the past 5 years |
| Netherlands | Up to 5 years | Decreasing exemption on part of salary (30%, 20%, 10%) | Recruited from abroad |
Luxembourg stands out with a clear, generous, and easy-to-apply regime: no complex calculations, no hidden thresholds—just a transparent and straightforward exemption.
5. A balanced but controlled regime
No prior approval is required, but Luxembourg’s Direct Tax Administration (ACD) may conduct audits afterwards. Employers must therefore retain all supporting documents for the full duration of the regime.
Employees already working in Luxembourg before 2025 can opt into the new regime, but this choice is irrevocable and should be considered carefully, ideally with professional tax advice.
6. Why move to Luxembourg?
Beyond the tax advantages, Luxembourg offers a highly favourable environment for international professionals. Located at the crossroads of Belgium, France, and Germany, it serves as a strategic base for international companies operating across European markets.
The country offers a safe, multilingual, and cosmopolitan living environment, with a workforce representing over 170 nationalities. Modern infrastructure, including international schools, facilitates family relocation. Labour laws are transparent and stable, providing reassurance to both employers and employees.
Combined with its strong economy, proximity to European institutions, and vibrant financial and tech sectors, Luxembourg presents a compelling case. The expatriate tax regime is one of several incentives, making it a highly competitive and welcoming destination.
7. Conclusion
Through this new regime, Luxembourg reinforces its role as a European hub for international talent. By combining tax incentives, administrative simplicity, and a clear legal framework, the modernised system meets the needs of companies facing growing challenges in attracting highly skilled professionals.
It forms part of a broader strategy to encourage the long-term settlement of strategic profiles and support international business development.
For companies or professionals interested in relocating to or doing business in Luxembourg or applying the expatriate tax regime, Kreston can facilitate contact with a local advisor who can assess individual situations and provide tailored guidance throughout the process.
