The grand duchy’s public coffers could face a shortfall of several million euro due to a drop in the amount managed by Luxembourg-based investment funds.

Assets under management declined from €5.9trn at the end of December to €5.2trn at the end of June, Luxembourg financial regulator has reported.

About 85% of the drop in assets under management was due to stock market conditions and 15% was due to net outflows, according to , director general of the Association of the Luxembourg Fund Industry.

The budget shortfall could come from the amount raised by Luxembourg’s subscription tax (). Investment funds generally are levied an annual rate of 0.05% of their net assets, which is paid quarterly.

The subscription tax generated €1.1bn in revenue for the state last year, and had previously been forecast to raise €1.4bn this year. But the fall in net assets will reduce those receipts, perhaps even below 2021 levels.

The hole will put further pressure on the public balance sheet. At the end of April, the government had already a deficit of -0.7% of GDP for 2022, after posting a surplus of +0.9% in 2021.