How to calculate inheritance tax in Luxembourg: children, siblings, third parties

Step 1: what is each heir's net share?

It is the market value of what the heir receives at the date of death, net of debts. For real estate, the administration uses the probable sale value, which it can check through an expert valuation or a comparison with recent sales (guichet.lu). Debts existing at death with their interest, taxes still owed and funeral costs are deducted. The outstanding balance of a mortgage therefore comes off.

The estate is then divided according to the law or the will. Each heir's share is taxed, not the estate as a whole: a €1,200,000 house left to two brothers gives two shares of €600,000, calculated separately. For reference, a house sold for €945,274 on average in Luxembourg over the twelve months to the end of June 2026, €1,372,796 in the canton of Luxembourg and €729,993 in the North (gouvernement.lu). Your house may differ widely: its own value is what you need to document.

Step 2: which base rate applies to the family tie?

Each tie has two rates: one for the legal share, one for the extra-legal part received by will on top of it.

Source: guichet.lu. In the direct line, 2.5 % applies to the disposable portion received as a preferential legacy (préciput et hors part), 5 % to the surplus. The 5 % rate between childless spouses, still quoted on foreign websites, disappeared on 1 January 2018.

Step 3: which surcharge applies?

As soon as an heir's net share exceeds €10,000, the base rate is increased by 1/10 to 22/10. The formula is simple: effective rate = base rate × (1 + surcharge). Key point: the bracket is set by the whole share, and the resulting rate applies to the entire share, not slice by slice.

Scale published by luxtoday.lu, consistent with the Guichet's official example. The Third party column also applies to any extra-legal part taxed at 15 %. The theoretical maximum is therefore 48 %. Have your notary confirm the official scale before any final calculation.

Effective rate = base rate × (1 + surcharge), applied to the whole share. A sister receiving €1,200,000 pays 6 % × 2.8 = 16.8 %, or €201,600.

Your calculation depends on the value of the inherited property: would you like a valuation based on real sales? Get my free valuation →

Step 4: how do you calculate for the direct line and the spouse?

Most of the time the calculation stops at zero. Two children inheriting a €1,200,000 house in equal shares each receive €600,000, entirely as legal share: €600,000 × 0 % = €0. The spouse, or a partner declared for at least three years, also pays 0 %, with or without a common child.

Things change if a will favours one child. If the parent leaves one of them the whole disposable portion, one third or €400,000, that part is taxed at 2.5 %: €400,000 × 2.5 % = €10,000 of base tax. The Guichet does not say clearly whether the surcharge also applies to these direct-line rates: check with your notary before putting a figure on it.

Step 5: how do you calculate for a brother, sister or nephew?

Read the right line of the scale, then multiply. Four examples:

• A sister receives a €45,000 legal share. Bracket 4/10, rate 6 % × 1.4 = 8.4 %. Tax: €3,780.
• A brother receives €550,000. Bracket 14/10, rate 14.4 %. Tax: €79,200, the Guichet's official example.
• A brother receives €600,000, of which €300,000 is legal share and €300,000 comes by will. The 14/10 bracket applies to both halves: 14.4 % × €300,000 = €43,200, plus 36 % × €300,000 = €108,000. Total: €151,200 (guichet.lu).
• For a €1,200,000 house with a single legal heir: a sister pays 16.8 %, or €201,600, a nephew 9 % × 2.8 = 25.2 %, or €302,400.

A nephew inherits as a legal heir, by representation, when there is no spouse, descendant, parent or surviving brother or sister. Otherwise, what he receives by will is extra-legal, at a 15 % base rate.

Step 6: how do you calculate for a third party, and where is the trap?

A third party, a friend, an undeclared partner or a stepchild who was not adopted, starts at 15 %. A friend receiving €180,000 falls into the 8/10 bracket: 15 % × 1.8 = 27 %, or €48,600. The same friend, or a nephew named in a will while the deceased's siblings are alive, receiving €1,200,000 pays 42 %, or €504,000. Above €1,750,000 the rate reaches 48 %.

The trap is the threshold effect. Because the bracket applies to the whole share, €240,000 received by a third party costs 28.5 %, or €68,400, but €260,000 costs 33 %, or €85,800. Twenty thousand euros more inherited, €17,400 more in tax. When an estate sits close to a threshold, the split between heirs deserves a real calculation, ideally before death, with your notary.

Final step: file, pay and have the property valued

Once the tax is calculated, the declaration must be filed within six months if the death occurred in Luxembourg, eight months elsewhere in Europe (pfi.public.lu), even when nothing is due. The administration then sends a payment demand, to be settled within six weeks. Being late costs an extra 1/10 of the duties, then half of the duties if the declaration is still missing.

Think about what comes next too: if you sell, you take over the deceased's purchase price and date, not the declared value (impotsdirects.public.lu), with an allowance of €50,000 per person, plus €75,000 for the parents' main residence inherited in the direct line.

All of this rests on a single fragile figure: the value of the property. At Secretimmo, we value inherited properties after a visit, based on real sales, and if you wish we sell them off-market, with no public exposure. Start with the free estimator at secretimmo.lu/valuation. The valuation is free if a mandate is signed within a week, otherwise it costs €600 excl. VAT.

This article is based on the inheritance pages of guichet.lu and pfi.public.lu, the scale published by luxtoday.lu, the "Vente d'un immeuble" page of the Direct Tax Administration and Le Logement en chiffres no. 20. Figures are indicative and do not replace the advice of your notary or tax adviser.

Frequently asked questions

How do you calculate inheritance tax in Luxembourg?

Work out the heir's net share, apply the base rate for the family tie, multiply by 1 plus the surcharge of the bracket, then by the share. Example: a sister receiving €45,000 pays 6 % × 1.4 = 8.4 %, or €3,780.

Is the surcharge applied slice by slice?

No. The bracket is set by the whole share and the surcharged rate applies to the entire share. That creates threshold effects: a third party pays €68,400 on €240,000 but €85,800 on €260,000.

What is the maximum inheritance tax rate in Luxembourg?

48 %: the 15 % third-party rate, surcharged by 22/10 for a share above €1,750,000. A brother or sister tops out at 19.2 % on the legal share.

How much does a brother pay on €600,000, half of it by will?

€151,200 according to the Guichet example: the 14/10 bracket applies to both halves, so 14.4 % on €300,000 of legal share and 36 % on €300,000 of extra-legal part.

Are debts and the mortgage deductible?

Yes. Debts existing at death, including interest, taxes still owed and funeral costs are deducted from the assets before each heir's net share is calculated.