1. The start-up tax credit

A centrepiece of this strategy is the introduction of a Start-Up Tax Credit, detailed in bill of law 8526, now under parliamentary review. This credit incentivises individuals to invest in early-stage businesses by offering a 20 per cent income tax credit on direct cash investments in eligible start-ups.

Key highlights:

• Maximum Credit: taxpayers can claim up to €100,000 tax credit annually, unused tax credits may be carried-forward.
• Eligibility requirements:
  • Investments must involve fully paid-up, registered shares held for at least three years.
  • To qualify as an eligible start-up, the business needs to meet certain size criteria including significant R&D expenditure and operational expenses which will need to be certified.
• Restrictions:
  • Investments exceeding the portion of 30 per cent ownership stake or €1.5 million per start-up.
  • A minimum investment threshold of €10,000 applies per taxpayer per start-up.

2. €300 Million investment commitment

To complement legislative measures, the Société Nationale de Crédit et d’Investissement (SNCI) will allocate an additional €300 million over five years to fund start-up and innovation growth. This funding aims to bolster strategic sectors such as cleantech, fintech, health-tech, and space technology, using a combination of equity, debt, and hybrid financial instruments.

3. Dedicated support for start-ups and scale-ups

The government is placing equal emphasis on nurturing new ventures and scaling high-growth businesses.

• Boosting start-ups: A new financial aid program, launching in May 2025, will support spin-offs with funding of up to €200,000. Public co-financing will cover 80 per cent of this amount, with 20 per cent coming from private sources.
• Scaling growth: Building on the success of pilot programmes, a targeted scale-up initiative will launch in late 2025 to enhance access to international markets.

4. Talent attraction elevates the ecosystem

Acknowledging that talent fuels innovation, the government is addressing workforce needs through a “talent desk.” This centralised hub will assist international professionals in transitioning to Luxembourg, supporting the long-term growth of the start-up community. In addition to the new impatriate regime a favourable tax conditions for employee stock options are planned to attract and retain highly skilled workers.

5. Driving community and innovation through infrastructure

Luxembourg is investing in its position as a hub for cutting-edge technologies. New projects include the development of an AI Experience Centre and AI Factory by the Luxembourg House of Financial Technologies (LHoFT). Together, these initiatives will build synergies across fintech, space, health technologies, and more.

The Luxembourg Venture Days, held annually, continue to bridge the gap between investors and start-ups, ensuring robust intersectoral collaboration and visibility on an international level.

This multifaceted 10-point plan reflects Luxembourg’s unwavering commitment to its start-up ecosystem. By combining financial incentives, legislative actions, and infrastructure development, the country is paving the way for sustained economic transformation.

With these measures slated for rollout by 2026, the Luxembourg government is setting a strong precedent, signalling to investors and talents alike that the nation is more committed than ever to fostering a resilient and forward-thinking economic landscape.

The 10-point action plan in French, can be found here and the Bill of Law 8526, in French, can be found here.