Inheritance tax in Luxembourg: who pays what in 2026?

Who has to pay inheritance tax in Luxembourg?

The person who inherits, according to their tie to the deceased and the deceased's residence, never their own. If the deceased's last home was in Luxembourg, the heirs pay inheritance tax on all movable assets, wherever they are, and on real estate located in Luxembourg. Real estate abroad is exempt (guichet.lu).

If the deceased lived outside Luxembourg, only Luxembourg real estate is taxed, as droits de mutation par décès, at the same rates. Luxembourg bank accounts are not taxed here. And whether you live in Luxembourg, Metz, Trier or Lisbon makes no difference to the Luxembourg calculation: residents and non-residents are treated the same way.

A word of warning for cross-border families: Luxembourg has not signed a single double tax treaty on inheritance (Chambers Private Wealth 2025). Your country of residence may tax on its side.

How much do children, parents and spouses pay?

Nothing on the legal share. In the direct line, children and parents, the share the law reserves for them is exempt. Spouses and partners declared for at least three years at the time of death have been fully exempt since 1 January 2018, with or without a common child. Many foreign websites still quote 5 % for a childless spouse: that rate no longer exists.

Tax only reappears in the direct line when a will favours one child beyond their legal share. The disposable portion received as a preferential legacy (préciput et hors part) is taxed at 2.5 %, any surplus at 5 %. Example: a parent leaves €1,200,000 to two children and bequeaths the whole disposable portion, €400,000, to one of them. On that part the base tax is €10,000. A surcharge could be added: the official text does not rule it out, but check this point with your notary.

Two children inheriting a €1,200,000 house in equal shares pay €0 in inheritance tax. Their only obligation: file the declaration on time.

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How much do siblings, nephews and third parties pay?

A lot, and more as the share grows. Base rates are 6 % on the legal share and 15 % beyond for a brother or sister, 9 % and 15 % for an uncle, aunt, nephew or niece, 10 % and 15 % for great-uncles and great-nephews, 15 % for anyone else.

On top of these rates comes a surcharge as soon as an heir's net share exceeds €10,000. It ranges from 1/10 to 22/10 of the base rate, and the bracket reached applies to the whole share, not just the part above the threshold (luxtoday.lu). The official Guichet gives the example of a €550,000 share: a 14/10 surcharge, so 6 % becomes 14.4 %, or €79,200 of tax for a brother (guichet.lu). At the top, above €1,750,000, a third party pays 15 % times 3.2: 48 %.

On our €1,200,000 house the gap is brutal. A sister as sole legal heir would pay €201,600. A nephew as sole legal heir, €302,400. A nephew named in a will while the deceased's siblings are alive, or a friend, €504,000. Same house, same value: €0 for a child, €504,000 for a friend.

On what value is the tax calculated?

On market value at the date of death, net of debts. For real estate, that means the probable sale value, and the Registration Duties Administration can check it through an expert valuation or a comparison with recent sales. Debts existing at death, including interest, unpaid taxes and funeral costs are deductible. A net estate of €1,250 or less is exempt.

The tax authority also adds back certain amounts: unregistered manual gifts made in the year before death, some transfers to relatives less than three months before death with a reserved usufruct, and life insurance. Undervaluing the house to pay less is a false good idea: the administration can order an expert valuation, and the law provides fines for insufficient valuation.

What are the deadlines and steps?

Six months to file if the death occurred in Luxembourg, eight months elsewhere in Europe, twelve months in America, twenty-four months in Africa or Asia (pfi.public.lu). The declaration is compulsory even when nothing is due, unless the heir renounces. It is what gets you the free exemption certificate banks ask for before releasing accounts.

For six weeks after filing you can correct the declaration without a fine. The administration then sends a payment demand, to be settled within six weeks. Being late is expensive: an extra 1/10 of the duties after a bailiff's summons, then a fine of half the duties if you still have not filed. A notary is not compulsory, but the Guichet strongly recommends one, and for a taxable estate the declaration is drafted by a notary or lawyer (guichet.lu).

What does selling the inherited house cost?

Less than you fear. First rule: you take over the deceased's purchase price and date, not the value declared at death (impotsdirects.public.lu). The capital gain is therefore calculated from your parents' purchase, revalued by an official coefficient.

Second rule: if the deceased held the property for more than five years, the gain is long term and taxed at half the global rate, at most about 21 % plus the employment fund contribution. The quarter rate ended on 30 June 2025 and does not apply in 2026. Third rule: each heir has an allowance of €50,000 every ten years, €100,000 for a jointly taxed couple, plus €75,000 when the property was the parents' main residence inherited in the direct line.

If several heirs stay in joint ownership and then divide, the partition duty is well below the 7 % of a sale: have your notary calculate it before choosing between selling or buying out the others.

How should you proceed with an inherited property?

In this order: identify the heirs and their ties, have the property valued at its real worth, file the declaration within six or eight months, then decide together whether to keep, rent or sell. The valuation is the key document: it sets the tax base for a brother or nephew, and it prepares the whole family's decision.

The context calls for a serious valuation: a house sold for €945,274 on average in Luxembourg over the twelve months to the end of June 2026, and the index for existing houses is down 3.7 % year on year (gouvernement.lu). An estate value backed by real sales protects you with the administration as much as with buyers.

At Secretimmo, we value inherited properties after a visit, based on real sales, and if you wish we sell them off-market, discreetly, without exposing the family on the portals. 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 law of 27 December 1817, the "Vente d'un immeuble" page of the Direct Tax Administration, Chambers Private Wealth 2025 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

Do children pay inheritance tax in Luxembourg?

Not on their legal share, which is exempt in the direct line. Only what a will gives them on top is taxed, at 2.5 % on the disposable portion received as a preferential legacy and 5 % on any surplus.

Does the surviving spouse pay inheritance tax?

No. Since 1 January 2018, spouses and partners declared for at least three years are exempt at 0 %, with or without a common child.

How much does a nephew pay on a €1,200,000 house?

As sole legal heir, 9 % with an 18/10 surcharge, so 25.2 % and €302,400. If he inherits by will without being a legal heir, the base rate rises to 15 % and the tax to €504,000.

Do you have to file a declaration if no tax is due?

Yes, unless you renounce. The deadline is 6 months if the death occurred in Luxembourg and 8 months elsewhere in Europe. The declaration also gets you the exemption certificate banks ask for.

Do non-residents pay inheritance tax in Luxembourg?

The heir's residence does not matter. If the deceased lived abroad, only Luxembourg real estate is taxed, at the same rates. Luxembourg has no double tax treaty on inheritance.