Tax rebate for start-ups

Luxembourg is an economic paradox: a small territory with a limited population, yet financial power that is disproportionate on a European scale. The country manages trillions of euros in assets through its fund industry, attracts international groups, concentrates a high density of private wealth and boasts one of the highest GDPs per capita in the world. However, when it comes to financing its own innovative start-ups, the situation becomes more complicated.

For over a decade, Luxembourg's start-up ecosystem has been taking shape, with incubators, accelerators, public programmes such as Fit4Start, university initiatives and institutional support. Success stories such as Talkwalker, Doctena and Tadaweb have emerged. Significant funds have been raised. But one link in the chain is regularly identified as fragile: early stage financing, in the first few years, when the risk is greatest for investors. This is precisely where the government has decided to take action.

Since 1 January 2026, a 20 per cent tax credit has been available to individuals investing in eligible start-ups. The measure is targeted, capped and regulated. Seemingly technical. In reality, it's strategic. Because behind the tax percentage lies a much broader question: is Luxembourg ready to transform part of its cautious capital into entrepreneurial capital?

Reform targeted at the fragile seed stage

Adopted via Law 8526 in December 2025, the reform provides for a tax credit equivalent to 20 per cent of the amount invested, with an annual ceiling of 100,000 euros per investor. The minimum investment is set at 10,000 euros. The shares must be held for at least three years. No single investor can hold more than 30 per cent of the capital, and the total amount invested per start-up is capped at 1.5 million euros.

In practical terms, an individual investing 100,000 euros in a young innovative company will be eligible for a 20,000 euro tax credit. If the company fails, the net loss will be partially written off. If it succeeds, the potential return is added to the tax advantage. The scheme explicitly targets the seed phase. It is at this stage that businesses are most vulnerable. Banks require guarantees that they cannot offer. Institutional funds are waiting for indicators of commercial traction. Between the idea and market validation, there is a financial vacuum.