Luxembourg Start-Up Tax Credit for Investors

Program Overview

Luxembourg's new Start-Up Tax Credit, enacted for the 2026 tax year, encourages individuals to invest in young, innovative companies. The law provides a 20% income tax credit on direct cash investments in new shares issued by eligible startups, incentivizing angel investment and early-stage funding.

Tax Credit Details

Credit rate: 20% of investment amount

Maximum credit: €100,000 per tax year

Maximum investment eligible: €500,000 (20% = €100K credit)

Type: Income tax credit (reduces tax liability)

Investor Eligibility

Who qualifies: Luxembourg resident individuals

Also eligible: Non-residents assimilated to resident taxpayers

Investment type: Direct cash investments in new fully paid-up registered shares

Acquisition timing: At incorporation or through capital increase

Holding period: Must hold shares for at least 3 years

Eligible Start-Up Requirements

Innovation: Must be engaged in innovative activity

Age: Established for less than 5 years

Size: Fewer than 50 employees

Financials: Balance sheet total or revenue of €10M or less

How It Works

Example: Invest €100,000 in eligible startup = €20,000 tax credit

Example: Invest €500,000 in eligible startup = €100,000 tax credit (maximum)

Application: Claim credit on annual income tax return

Timeline: Credit available starting 2026 tax year

Key Conditions

3-year holding requirement: Shares must be held for minimum 3 years

New shares only: Must be newly issued at incorporation or capital increase

Cash investment: Must be direct cash payment (not in-kind)

Startup compliance: Company must maintain eligibility criteria

Benefits for Investors

Immediate tax savings: 20% return through tax credit

Risk mitigation: Government subsidy reduces investment risk

Portfolio diversification: Incentivizes early-stage investing

Economic contribution: Support Luxembourg innovation ecosystem

Benefits for Start-Ups

Attracts angel investors with tax incentive

Increases available capital for young companies

Enhances Luxembourg's attractiveness for startups

Contact Information

Tax authority: Administration des contributions directes

Information: Consult tax advisor or Luxembourg tax authorities

Effective date: 2026 tax year onwards