Draft Law No. 8526 – Planned Tax Incentive for Investments in Young Innovative Companies

On April 4, 2025, the Luxembourg government introduced Draft Law No. 8526. The proposal provides for the creation of a new “Start-Up Tax Credit” designed to promote private investments in young and innovative companies through tax incentives.

The draft law is currently under parliamentary review. Amendments are still possible, as the proposal has sparked considerable debate.

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FAQ

1. Who would be eligible?

According to the current draft, the tax incentive would apply to individuals who are subject to taxation in Luxembourg (or are treated as residents for tax purposes) and who invest equity directly into a young, innovative company.

The participation must be fully paid in and held for a minimum period of three years.

Indirect investments through transparent entities (such as SCS or SCSp) are not currently eligible, although this point remains under discussion.

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2. What tax benefit is proposed?

The draft law provides for a tax credit equal to 20% of the invested amount, with an annual ceiling of EUR 100,000 per investor.

Individual investments must amount to at least EUR 10,000, and an investor’s shareholding may not exceed 30% of the company’s share capital.

In addition, the total amount of eligible investments in any given start-up would be capped at EUR 1.5 million.

Unused credits could be carried forward to subsequent tax years.

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3. What should potential investors consider?

Nach derzeitigem Stand des Entwurfs müssten begünstigte Unternehmen („Start-Up Entities“) bestimmte Kriterien Under the current proposal, eligible companies (“Start-Up Entities”) must meet certain conditions, including:

• Established less than five years ago,
• Fewer than 50 employees,
• Annual profit or total assets total below EUR 10 million,
• At least 15% of expenses related to research and development in one of the last three financial years.

Investors may not be founders or employees of the company.

As the draft law is still under discussion in Parliament, the final requirements and thresholds may be subject to change.

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Conclusion

With the proposed Start-Up Tax Credit, Luxembourg aims to mobilize private capital to support innovative young companies.
Whether and in what form the measure will ultimately be implemented depends on the outcome of the legislative process.

If you are considering investing in start-ups or would like to know whether you could benefit from the proposed incentive, please contact us for a tailored tax assessment and consultation.

Please do not hesitate to contact us if you have any questions.

Status: Oktober 16, 2025