Glossary
Updated on 13/03/2025

Impatriate income

What is the impatriate income? — The impatriate income (Revenu impatrié) refers to specific tax benefits granted to employees who relocate to Luxembourg for professional reasons. These benefits, introduced under Article 13b of the Luxembourg Income Tax Law, aim to make Luxembourg an attractive destination for skilled professionals and compensate for costs associated with moving and settling in the country.

What are the key components of impatriate income benefits in 2024? — The following costs, covered by the employer, are partially or fully tax-exempt under the impatriate regime:
  1. Relocation Expenses:
    • Moving costs from the home country to Luxembourg.
  2. Housing Costs:
    • Setting up accommodation in Luxembourg.
  3. Family-Related Travel:
    • Travel expenses for special family circumstances.
  4. Return Costs:
    • Final relocation costs back to the home country after the assignment.
  5. Housing Differential:
    • Housing costs in Luxembourg if the employee maintains a residence in their home country or the cost differential for comparable housing.
  6. Annual Home Visits:
    • One trip per year between Luxembourg and the home country for the employee and their immediate family.
  7. Tax Equalization:
    • Compensation for tax differences between Luxembourg and the home country.
  8. Education Costs:
    • Additional school fees for children forced to switch schools due to the relocation.
  9. Impatriation Bonus:
    • A 50% tax exemption on an impatriation bonus, capped at 30% of the employee's annual gross salary, designed to cover cost-of-living differences and miscellaneous relocation costs.

What are the eligibility criteria for impatriate income benefits? — To qualify for the impatriate income benefits, the following conditions must be met:
  • Residence: The employee must establish tax residency in Luxembourg and not have been fiscally domiciled in Luxembourg within the last 5 years.
  • Employment: The employee must have a principal professional activity in Luxembourg with an annual gross fixed salary of at least 75000€.
  • Role Replacement: The impatriate cannot replace a non-impatriate employee in the same role.
  • Specialized Skills: For secondments: Minimum 5 years of seniority or specialized experience in the field. For recruitment: Proven specialized expertise.
  • Company Size Restriction: Impatriates cannot exceed 30% of the company's workforce unless the company is less than 10 years old.
  • Reporting Obligation: Employers must submit an annual list of employees benefiting from these measures to the tax authority by January 31.

What are the tax limits and caps?
  • Repeatable Costs (e.g., housing, tax equalization): Capped at 50000€ per year, or 80000€ for shared households.
  • Impatriation Bonus: Exemptions are valid for up to 8 years after relocation to Luxembourg.

What changes are planned for the impatriate regime in 2025? — To enhance competitiveness and attract skilled professionals, the impatriate regime will shift to a simplified model in 2025:

  1. Flat Exemption Model:
    • Instead of itemized exemptions, 50% of the total annual gross salary will be tax-exempt.
  2. Higher Cap:
    • The exemption is capped at a maximum of 400000€ annually.

This streamlined approach aims to provide employers with a practical tool for recruiting and retaining key talent while making Luxembourg more competitive internationally.

How does the impatriate income regime benefit employers? — The regime offers employers a valuable recruitment tool, making it financially feasible to attract highly qualified international professionals. It reduces the overall compensation package costs while providing attractive benefits to potential employees.

How does the impatriate income regime benefit employees? — For employees, the regime significantly reduces the financial burden of relocation, addresses concerns about higher living costs in Luxembourg, and provides tax benefits that enhance the overall compensation package.

Why is the impatriate income regime important? — The impatriate income regime is essential for:
  • Reducing financial barriers for skilled professionals relocating to Luxembourg.
  • Enhancing Luxembourg's global competitiveness in attracting qualified labor.
  • Supporting businesses in their growth by offering a clear and attractive incentive for international talent.

Synonyms: Tax benefits for impatriates, expatriate income benefits, relocation tax regime, impatriate tax incentives.
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