Luxembourg amends Pillar 2 Law to implement automatic exchange of GloBE Information Returns and OECD guidance
On 24 July 2025, the Luxembourg government submitted Draft Law No. 8591 to parliament. The bill transposes Directive (EU) 2025/872 (DAC 9) and implements the OECD/G20 Inclusive Framework’s multilateral agreement on the automatic exchange of GloBE Information Returns. It also amends the existing Pillar 2 Law of 22 December 2023 to align with recent OECD administrative guidance.
The Draft Law introduces a structured legal basis for the automatic exchange of GloBE Information Returns (GIRs) filed in Luxembourg. This exchange mechanism is designed to align with the OECD’s global minimum tax framework and the EU DAC 9 and ensures that Luxembourg complies with international transparency standards.
Under this framework, GIRs filed in Luxembourg will only be exchanged with jurisdictions that have a valid competent authority agreement in place with Luxembourg and that are explicitly listed in a Grand Ducal regulation (still to be released).
In addition. several articles of the existing Pillar 2 Law have been amended to clarify and refine the application of the rules.
Luxembourg introduces revised carried interest regime to enhance the country’s attractiveness for the private equity and alternative investment industry
Following Finance Minister, Gilles Roth, announcement at the Nexus 2025 tech symposium on AI and innovation on 18 June 2025 , the government released on 24 July 2025 Draft Bill 8590 introducing a revised carried interest regime.
The draft bill intends to enhance as well as clarify, the tax treatment of carried interest for attracting alternative investment fund managers in Luxembourg and strengthen the financial sector and economy. It lays down a clear and competitive framework for the taxation of carried interest income.
The new proposed tax treatment of carried interest distinguishes between two types of carried interest:
- Contractual carried interest (i.e. carried interest which is not inseparably linked to a participation in an AIF or represented by a participation in an AIF): the income will qualify as a speculative gain, taxable as extraordinary income at ¼ of the taxpayer’s global tax rate (i.e. an effective tax rate which should not exceed 12%).
- Carried interest which is inseparably linked to a direct or indirect participation in an AIF or when the carry is represented by such a participation: carried interest income will qualify as speculative gain. However, no taxation will arise providing the participation has been held for more than 6 months and providing the individual does not hold a substantial shareholding in a corporate vehicle (i.e. not more than a 10% shareholding).
In addition, the draft bill significantly enlarges the scope of the carried interest qualifying for the above tax treatment.
