{"id":5064,"date":"2025-08-21T13:54:00","date_gmt":"2025-08-21T11:54:00","guid":{"rendered":"https:\/\/omnitrust.lu\/?p=5064"},"modified":"2026-04-23T14:01:02","modified_gmt":"2026-04-23T12:01:02","slug":"carried-interest-tax-regime-luxembourg","status":"publish","type":"post","link":"https:\/\/www.omnitrust.lu\/en\/blog\/nouveau-regime-fiscal-pour-linteressement-a-la-plus-value-carried-interest-au-luxembourg\/","title":{"rendered":"New Tax Regime for Carried Interest in Luxembourg"},"content":{"rendered":"<p class=\"translation-block\">Reminder: Carried interest (performance-based remuneration) refers to the share of profits an alternative investment fund (\u201cAIF\u201d) allocates to its managers once a predefined performance threshold (the hurdle rate) has been exceeded. It is a success fee designed to align the interests of investors and fund managers.<\/p>\n\n\n\n<p class=\"translation-block\">On 24 July 2025, the government, represented by the Minister of Finance, submitted Bill No. 8590, aimed at clarifying and modernising the tax treatment of carried interest for Luxembourg tax residents. The reform seeks to enhance legal certainty and strengthen Luxembourg\u2019s attractiveness as a hub for the alternative funds industry.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">I. Key Highlights<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">1. Broader Scope of Beneficiaries<\/h3>\n\n\n\n<p>The regime will no longer be limited to employees of management companies or AIF managers. It will now extend to any individual providing services to fund managers, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>employees of service providers (e.g., advisory firms),<\/li>\n\n\n\n<li>independent directors,<\/li>\n\n\n\n<li>partners or other non-employees.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">2. Two Types of Carried Interest and Their Tax Treatment<\/h3>\n\n\n\n<p><strong>a) Contractual carried interest<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Based solely on a contractual right, without equity participation in the fund.<\/li>\n\n\n\n<li class=\"translation-block\">Classified as a speculative gain, taxed at 25% of the global progressive rate, i.e. approximately 11.45% at the marginal rate.<\/li>\n<\/ul>\n\n\n\n<p><strong>b) Participation-linked carried interest<\/strong> <\/p>\n\n\n\n<p><strong>The remuneration is linked to a direct, indirect, or represented equity participation in the AIF.<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Class\u00e9 \u00e9galement comme gain sp\u00e9culatif, mais\u00a0<strong>exon\u00e9r\u00e9 d\u2019imp\u00f4t<\/strong>\u00a0si les conditions suivantes sont remplies :\n<ul class=\"wp-block-list\">\n<li>participation\u00a0<strong>inf\u00e9rieure \u00e0 10 %<\/strong>, et<\/li>\n\n\n\n<li><strong>d\u00e9tention de plus de 6 mois<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>L\u2019exon\u00e9ration devrait couvrir aussi bien les plus-values que les revenus distribu\u00e9s, m\u00eame si les modalit\u00e9s pratiques restent \u00e0 pr\u00e9ciser.<\/li>\n\n\n\n<li>For simplification purposes, the tax benefits (as described above) remain applicable even where transparent entities are interposed.<\/li>\n\n\n\n<li>If the carried interest is channelled through a tax-transparent vehicle, it is deemed to derive directly from the fund and thus remains eligible.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">3. Additional Key Changes<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">The new regime makes the reduced tax treatment permanent, unlike the previous temporary framework (limited to 10 years for certain inbounds between 2013 and 2018).<\/li>\n\n\n\n<li class=\"translation-block\">It removes the requirement for investors to first recover their contributed capital before carried interest distributions, thereby allowing deal-by-deal structures (profit participation on an investment-by-investment basis).<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">4. Entry into Force and Transition<\/h3>\n\n\n\n<p class=\"translation-block\">If adopted, the regime will apply as from 1 January 2026. Beneficiaries under the former regime will automatically transition to the new framework, without losing any tax advantages.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">II. Why This Reform Matters<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Enhanced legal certainty for beneficiaries.<\/li>\n\n\n\n<li class=\"translation-block\">Competitive tax regime: reduced rate (maximum 11.45%) or full exemption subject to conditions.<\/li>\n\n\n\n<li class=\"translation-block\">Better alignment with market practice: broader range of beneficiaries, greater flexibility, and softer tax treatment.<\/li>\n\n\n\n<li class=\"translation-block\">A strong signal reaffirming Luxembourg\u2019s position as a leading European hub for alternative investment funds.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">III. What\u2019s Next?<\/h2>\n\n\n\n<p>The bill is currently under parliamentary review. If adopted, it will apply from 2026. This reform demonstrates Luxembourg\u2019s clear ambition to:\n\nattract front-office functions in the fund industry,\nmodernise its tax framework,\nand remain competitive in an increasingly demanding international environment.<\/p>\n\n\n\n<p class=\"translation-block\">At OmniTrust, we are closely monitoring these developments and stand ready to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>analyse your carried interest exposure,<\/li>\n\n\n\n<li>assess the eligibility of your structures or contractual arrangements,<\/li>\n\n\n\n<li>and assist you in implementing or adapting your carried interest schemes.<\/li>\n<\/ul>\n\n\n\n<p>Feel free to contact us to learn more.<\/p>","protected":false},"excerpt":{"rendered":"<p>Rappel&nbsp;:&nbsp;Le&nbsp;carried interest&nbsp;(int\u00e9ressement aux surperformance) est une part des profits qu\u2019un fonds d\u2019investissement alternatif (\u00ab&nbsp;AIF&nbsp;\u00bb) verse \u00e0 ses gestionnaires quand un seuil de performance (appel\u00e9 hurdle rate,) est d\u00e9pass\u00e9.&nbsp;Il s&rsquo;agit d\u2019une prime de succ\u00e8s alignant les int\u00e9r\u00eats des investisseurs et des \u00e9quipes de gestion. Le&nbsp;24 juillet 2025, le gouvernement repr\u00e9sent\u00e9 par le ministre des Finances a [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":1468,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"service_lie":[38],"type_contenu":[],"class_list":["post-5064","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","service_lie-fiscalite-tva"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/posts\/5064","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/comments?post=5064"}],"version-history":[{"count":3,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/posts\/5064\/revisions"}],"predecessor-version":[{"id":5068,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/posts\/5064\/revisions\/5068"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/media\/1468"}],"wp:attachment":[{"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/media?parent=5064"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/categories?post=5064"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/tags?post=5064"},{"taxonomy":"service_lie","embeddable":true,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/service_lie?post=5064"},{"taxonomy":"type_contenu","embeddable":true,"href":"https:\/\/www.omnitrust.lu\/en\/wp-json\/wp\/v2\/type_contenu?post=5064"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}