Death and inheritance tax, who inherits and how much?

When a person dies in Luxembourg, it is necessary to declare the death to various organizations and to organize the succession of the deceased. We tell you more about it.

What to do in case of death?

Declaration of death to the municipality

In the event of the death of a relative, the declaration of death must be made within 24 hours of the death to the local administration of the place where the death occurred.

When a death is declared, the doctor who declared the death will draw up a medical certificate with the causes of death, called a declaration of death.

This medical certificate must be provided by the person declaring the death, either a relative of the deceased or the funeral home contacted by the family of the deceased.

Other documents will be required: the family record book of the deceased, and/or all identification documents, a certificate of committal in case of burial or a medical certificate of non-violent death in case of cremation.

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

Administrative procedures with the various organizations

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

  • health insurance. You may be eligible for a funeral expense allowance
  • death fund
  • pension fund
  • employer of the deceased and of the beneficiaries of an extraordinary bereavement leave
  • insurance company if there is life or death insurance
  • banking institutions
  • notary for the establishment of the succession
  • Consulate or embassy of the country of origin of the deceased
  • SNCT if the deceased owned a vehicle registered in his or her name
  • Administration of registration, domains and VAT within the framework of the declaration of succession.

Declaration of Succession

A declaration of inheritance will have to be made to the Registry of Domains and VAT within 6 months of the death.

This declaration must be accompanied by 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 property ownership by the deceased.

In case of death, who inherits in Luxembourg?

Upon the death of a person resident in Luxembourg, an inheritance is opened on the whole of his wealth and property. These will be passed on to his heirs in a certain order. Inheritance tax will be payable, calculated differently depending on the status of the heir and the nature of the property transmitted.

Law of succession and legatees

Like its European counterparts (excluding Denmark, Ireland and the United Kingdom), Luxembourg signed a convention in 2015 stipulating that the deceased may choose in advance the law of succession applying to his or her estate in case of death: country of residence or country of nationality. In the absence of an expressed wish, the law of succession of the country of residence applies.

When the deceased has established his last principal residence or the seat of his wealth in Luxembourg, the succession applies as follows

The legatees may or may not be resident in Luxembourg.

Order of succession

The heirs are designated either by will (if there is one) subject to the reserved share, or in the order of succession established by Luxembourg law, namely

  1. the descendants: the children (or their descendants by representation in the event of the prior death of one of them) inherit in equal shares. Whatever their status (legitimate, adulterous, adopted or natural), they exclude all other heirs except the surviving spouse.
  2. the surviving spouse has a privileged status. If there are no children, he or she inherits all the property. However, he or she can be excluded from the estate by will. In case of presence of children, and except for a particular provision “special available share between spouses”, the spouse can opt to inherit the totality of the usufruct on the marital home and the furniture (if he was a joint owner). In this case, the children benefit from the bare ownership on this property and the full ownership on the rest. The spouse can also opt for a share equivalent to that of the children, i.e. a minimum of 1/4 of the estate.
  3. If there are no children and no surviving spouse, the parents and collaterals are heirs with right of first refusal. They inherit the property, up to 1/4 for each of the parents and the rest is shared between the brothers and sisters or their representatives. If there are no collaterals, the parents inherit everything.
  4. In the fourth order, the ascendants inherit half from the maternal branch and half from the paternal branch. It is then the closest ascendant who inherits the whole. In case of absence of one of the branches, the whole is devolved to the other branch.
  5. In the fifth order, the closest collateral of each branch, maternal and paternal, inherits half of each branch. The succession goes back to the 4th degree, knowing that in the absence of one of the branches, the whole is devolved to the other branch.
  6. In the sixth and last order, the State will inherit the fortune of the deceased.

The designated heirs may accept the estate as is or subject to inventory, contest it or renounce it.

What are the death duties?

Deceased with last main residence in Luxembourg

Transfer duties are calculated on the net value of the estate assets, i.e. movable property owned in Luxembourg or abroad and real estate located in Luxembourg.

The inheritance rights of real estate located abroad depend on the inheritance law of the country in question. Personal 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.

The liabilities (debts) will be deducted from the tax base.

Inheritance tax is payable to the Luxembourg State, whether or not the heirs are resident in Luxembourg.

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

In the case of an inheritance in the direct descending or ascending line, the inheritance will be exempted within the limit of the legal share. In the case of a will, for example, the extra-legal portion will be taxed at 2.5% or 5% depending on the case.

Also, the estate between spouses is not taxable if the spouses or partners have common children. Otherwise, the estate will be taxed at 5%.

Inheritances between collaterals are taxed between 6% for the legal share and 15% for the extra-legal share.

Inheritances beyond that are taxed between 9 and 15% maximum.

Deceased not resident in Luxembourg

In the case of a deceased person who is not a resident of Luxembourg, inheritance taxes will be levied by the Luxembourg State on the real estate located in Luxembourg, whether the heirs are Luxembourg residents or not.

In any case, find out 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 passed on.

To learn more about inheritance tax in Luxembourg, please visit guichet.lu.