ING Luxembourg

Succession and inheritance in Luxembourg in 6 questions

Succession and inheritance in Luxembourg in 6 questions (Photo: ING Luxembourg)

Succession and inheritance in Luxembourg in 6 questions (Photo: ING Luxembourg)

Unlike many other EU countries, Luxembourg does not have high taxes if you inherit property or money from a family member or spouse. But the laws on inheritance are stringent. You have rights and duties to assert, especially if you are a direct descendant.

Can my parents disinherit me?

The answer is no. Unlike most Anglo-Saxon countries, Luxembourg has an automatic system of heirship, which overrides any will. Those in the direct line of inheritance, like children or parents, automatically inherit a portion of the estate. Children take priority and exclude all other heirs except for the surviving spouse. If you are the only child, you will inherit half the net estate. If you are two children, you will inherit a third each. If you are three or more, you will get an equal share of three quarters of the net estate. 

How are inheritance taxes calculated?

Inheritance taxes are calculated on the net asset value left by the deceased. These include immovable assets located in Luxembourg and all movable assets (furniture, cars, shares, money, painting, etc.), whether located in Luxembourg or abroad, minus the liabilities (debts or tax owed, funeral costs, etc.). Are not included properties held in another country, which are generally subject to tax laws in that country. 

You have to pay inheritance taxes whether you live in Luxembourg or not. That does not apply if the testator had several nationalities or is not Luxembourgish and made a will or a declaration in Luxembourg stating that they choose the country's law of (any of) their nationality. In this case, the deceased is assimilated to someone who lived abroad and transfer taxes are applicable. In other words, you will have to pay taxes calculated on the value of the immovable assets in Luxembourg. Other movable assets in Luxembourg are not subject to any Luxembourg inheritance tax. 

After the death of a loved one, you or your legatee must file an inheritance or transfer declaration with the Registration, Duties and VAT Authority (AED). The declaration will be used for determining what inheritance taxes are to be paid.

What inheritance taxes do I have to pay?

The tax administration makes a difference between the legal part of your inheritance that you collect according to your capacity and the extra-legal part, any portion of the estate not subject to the automatic heirship rule that you collect as a result of a will. 

You don’t pay any inheritance tax if you are the direct descendants (children or grandchildren) or ascendants (parents or grandparents). The base rate is 6% if you are a brother or a sister, 9% if you are an aunt, an uncle, a nephew or a niece and 15% if you are a non-relative. 

On the first EUR 10,000 that you inherit, the extra-legal base rate is charged 2,5% or 5% if you are in the direct line of inheritance and 15% if you are not. Above EUR 10,000, the inheritance tax rates increase on a sliding scale. You can find this sliding scale and rates on the indirect taxation portal.

What happens if I am the spouse or the partner?

If you are the spouse or the civil partner bound for at least three years by a declaration of partnership, you are exempt from inheritance tax. 

If you don’t have any child, you will inherit the whole estate without any inheritance tax charge or… nothing. Unlike children, you can be excluded from inheriting through the will of your partner.

If there are children, you may choose:

- The full right of the property inhabited by you and your deceased spouse and its furnishings. Your children inherit the bare ownership of the property and its furnishings and full ownership of the remainder of the estate. This is only possible if the property was owned by your deceased spouse alone or jointly with you.

- The full ownership of a child’s share (at least one quarter of the estate). 

Luxembourg law, however, provides for a “special discretionary portion of the spouse”, allowing you to either inherit a share of the estate and have the usufruct of the rest of the estate or have the usufruct of the entirety of the estate.

How to trace movable assets from a deceased relative I inherit?

You may doubt whether a deceased relative you inherited has held assets with a Luxembourg bank during their lifetime or another professional of the Luxembourg financial sector. In this case, you have to address your request to the different banks and other professionals in Luxembourg's financial sector and ask them whether your relative has held any assets with them. Don’t forget to attach to your requests certain documents which prove your entitlement, namely a death certificate of the deceased relative, a certified copy of your ID card and a legal document evidencing your rights. 

You can consult the list of the banks and professionals on the search entities database of the CSSF (Commission de Surveillance du Secteur Financier). The Association des Banques et Banquiers, Luxembourg may also assist in your search.

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