Luxembourg Inpatriate Regime: Tax Benefits for Expatriates

Exempt allowances and bonuses

Inpatriates can receive tax-free expatriation allowances covering: cost-of-living differential, moving and installation expenses, children's schooling fees in international schools, return trips to the home country (home leave), and housing costs exceeding a reasonable threshold. These allowances must match actual expenses and be documented. The total amount cannot exceed 30% of base compensation for executive profiles, or 50% in certain specific cases validated by the authorities.

Eligibility conditions

• Not having been a Luxembourg tax resident during the 5 years preceding arrival
• Being recruited abroad by a Luxembourg employer (or transferred by an international group)
• Performing a role requiring specific expertise not available on the local market
• Minimum annual gross compensation of 100,000 euros (excluding inpatriation bonuses)
• Establishing main residence in Luxembourg for the duration of the regime

Application procedure

The application is submitted by the employer to the Administration des Contributions Directes, RTS office of jurisdiction, before or shortly after the employee's arrival. The file includes the employment contract, job description, employee CV, justification of specific expertise, and details of planned allowances. The authority issues a written agreement (ruling) confirming the conditions of the regime. The 5-year duration is non-renewable, but a change of employer within Luxembourg does not necessarily interrupt the benefit of the regime if the conditions remain met.