Death and inheritance rights: what should you do?

When it comes to inheritance, Luxembourg stands out for the stability and attractiveness of its tax framework, which has not undergone any major reforms in recent years. The system remains particularly favorable for transfers to direct descendants: children and parents are fully exempt from tax on the statutory share, while spouses and partners may also be exempt under certain conditions. Only distant or unrelated heirs are subject to higher taxation.

For expatriates and their families, this stability is a significant advantage, offering solid protection for the transfer of family wealth while simplifying administrative procedures.

What to do in the event of a death in Luxembourg?

When a person dies in Luxembourg, their death must be reported to various authorities, and the deceased’s estate must be settled. We’ll tell you more about this.

Reporting a death to the municipality where the death occurred

In the event of a loved one’s death, it must be reported within 24 hours to the municipal office where the death occurred, along with the medical certificate provided by the doctor who certified the death.

The death can be reported by a relative of the deceased or by the funeral home contacted by the deceased’s family.

Other documents must be provided: the deceased’s family record book and/or all forms of identification, a burial certificate in the case of burial, or a medical certificate of non-violent death in the case of cremation.

The municipality will issue the death certificate and provide a burial or cremation permit.

Administrative Procedures in the Event of Death

Copies of the death certificate must be provided to various organizations:

• Banks. In the event of a death, you must report the death to the banks holding an account in the person’s name. These banks will take all necessary steps to freeze the accounts pending the settlement of the estate. Please note that this also applies to joint accounts or safe deposit boxes.
• Health insurance provider. You may be eligible for a funeral expense allowance
• Death benefit fund
• Pension fund
• The deceased’s employer and beneficiaries are entitled to special leave in the event of a death
• Insurance company, if there is life or death insurance
• notary for the settlement of the estate
• Consulate or embassy of the deceased’s country of origin
• SNCT if the deceased owned a vehicle registered in their name
• Registration, Property, and VAT Administration in connection with the estate declaration.

Declaration of Succession in Luxembourg

A declaration of succession must be filed with the Administration of Registration, Real Estate, and VAT within 6 months of the death.

The death certificate issued by the municipality, the notarized deed in the case of a marriage contract, and a cadastral extract in the case of real estate owned by the deceased must accompany the declaration of succession.

In the event of death, who inherits in Luxembourg?

Upon the death of a person residing in Luxembourg, an estate is opened covering all of their assets and property. An order of succession determines who inherits and how much.

Heirs must pay inheritance tax, calculated differently depending on the heir’s status and the nature of the assets transferred.

Succession Law and Heirs in Luxembourg

Like its European counterparts (excluding Denmark, Ireland, and the United Kingdom), Luxembourg signed an agreement in 2015 stipulating that the deceased may choose in advance the inheritance law applicable to their estate in the event of death: the country of residence or the country of nationality. In the absence of an expressed wish, the inheritance law of the country of residence applies.

When the deceased established their last principal residence or the seat of their estate in Luxembourg, the succession is governed by the Luxembourg order of succession in the absence of a will.

Beneficiaries may or may not be residents of Luxembourg.

Luxembourg Order of Succession

In Luxembourg, individuals may designate their heirs by will, subject to a statutory share. In the absence of a will, heirs are designated in the order of succession established by Luxembourg law.

First order of succession in Luxembourg: descendants, the children of the deceased

The children of the deceased (or their descendants by representation in the event of the prior death of one of them) inherit in equal shares. Regardless of their status (legitimate, illegitimate, adopted, or natural), they exclude all other heirs except the surviving spouse. Children are heirs entitled to a reserved share; they cannot be disinherited .

Second order of succession in Luxembourg: the surviving spouse

The surviving spouse enjoys a privileged status . In the absence of children , they inherit all of the deceased’s assets. However, they may be disinherited by will.

If there are children, and unless there is a specific provision for a “special share of the disposable portion between spouses,” the surviving spouse may choose to inherit full usufruct of the marital home and its furnishings (if they were joint owners). In this case, the children receive bare ownership of this property and full ownership of the remainder.

The spouse may also choose a share equivalent to that of the children, i.e., at least 1/4 of the estate.

Whether it’s a common-law marriage, a legal marriage, or a civil partnership (PACS), the choice of union type has tax implications, even in the event of inheritance. Learn more here.

Third order of succession: the deceased’s parents and collateral relatives

In the absence of children and a surviving spouse, the parents and collateral relatives of the deceased are heirs entitled to a reserved share.

They inherit the estate, with each parent receiving 1/4, and the remainder is divided among the siblings or their representatives. If there are no collateral relatives, the parents inherit the entire estate.

Fourth order of succession in Luxembourg: the deceased’s ascendants

In the fourth order, the deceased’s ascendants inherit half from the maternal side and half from the paternal side.
In this case, the closest ascendant inherits the entire estate. If one of the branches is absent, the entire estate passes to the other branch.

5th order of succession: the deceased’s collateral relatives

In the fifth order, it is the closest collateral relative of each branch,
maternal and paternal, who inherits half of the deceased’s estate from each branch. The succession extends up to the 4th degree; if one of the branches is absent, the entire estate passes to the other branch

6th order of succession in Luxembourg: the State

In the sixth and final order, the State inherits the deceased’s estate in the absence of any other heirs.

The designated heirs may accept the estate as is or subject to inventory (a statement of assets and liabilities), contest it, or renounce it.

Do you need cross-border legal advice? Consult a law firm specializing in cross-border matters.

What are the inheritance taxes?

Inheritance taxes for a deceased person residing in Luxembourg

Estate assets for a deceased person residing in Luxembourg

Inheritance taxes are calculated based on the net value of the deceased person’s estate, namely movable property owned in Luxembourg or abroad and real estate located in Luxembourg.

Inheritance tax on real estate located abroad depends on the inheritance laws of the country in question. Movable property located abroad may, under certain conditions, be subject to inheritance tax in the country where it is held, depending on the nationality of the deceased.

Liabilities (debts of the deceased) will be deducted from the tax base.

Calculation of inheritance tax for a deceased person who was a Luxembourg resident

Heirs must pay inheritance tax to the Luxembourg government, regardless of whether the heirs are residents of Luxembourg or not.

Inheritance tax on assets acquired abroad is subject to the tax and inheritance laws of that country.

In the case of an inheritance in the direct line of descent or ascent, the inheritance in Luxembourg will be exempt up to the statutory share. In the context of a will, for example, the portion exceeding the statutory share will be taxed at 2.5% or 5%, depending on the circumstances.

Similarly, inheritance between spouses is not taxable in Luxembourg if the spouses or partners have children in common. Otherwise, the inheritance will be taxed at 5%.

Inheritances among collateral relatives are taxed at 6% for the statutory share and 15% for the non-statutory share.

Beyond these specific cases, inheritances are taxed at a rate of 9% to a maximum of 15%.

Inheritance Tax for a Deceased Person Not Resident in Luxembourg

In the case of a deceased person who is not a resident of Luxembourg, the Luxembourg government will collect inheritance tax on real estate located in Luxembourg, regardless of whether the heirs are Luxembourg residents or not.

In all cases, be sure to thoroughly research your personal situation in the event of death with regard to your country of residence, your country of nationality, the residence of your potential heirs, and the location of the assets to be transferred.

For more information on inheritance tax in Luxembourg, visit the guichet.lu website.

Certain products, such as life insurance, allow assets to be transferred to the policy beneficiaries without incurring inheritance tax. These products are also very attractive financial savings options for expatriates. Contact your bank or insurance provider directly for more information. They will be able to advise you.

Here is a quick overview of the tax system in effect in Luxembourg.