Luxembourg carried interest and special tax reform ‘good news’ for businesses

David Maria and Stephanie Raffini, tax and corporate law specialists at Pinsent Masons, were commenting following an announcement made by finance minister Gilles Roth at the Nexus 2025 conference.

Carried interest, a share of profits earned by fund managers, has long been a contentious issue in European tax policy. Roth’s announcement aligns Luxembourg with other leading financial centres that offer favourable treatment for this type of income. The new regime is designed to attract top-tier fund managers by offering a clear and competitive tax structure, aiming to reinforce Luxembourg’s appeal as a base for private equity and venture capital operations.

Alongside the carried interest reform, the financial minister announced a new tax regime for stock options granted to startup employees. This initiative aims to reward early stage contributors who often accept lower salaries in exchange for equity stakes in the companies they help build up. This move follows earlier reforms, such as the modernisation of the expatriate tax regime.   

Beyond tax policy, Roth reiterated the government’s commitment to digital transformation in the financial sector. He highlighted the launch of the ‘peak accelerator’, a new initiative aimed at supporting the digitalisation of investment fund services.

The minister also pointed to recent legislative advancement, including the adoption of blockchain laws and the transposition of the EU MiCA directive, which regulates crypto assets. These steps, he said, provide a flexible yet secure framework for digital finance, balancing investor protection with innovation.

The announcements are part of the government’s broader vision to ensure Luxembourg remains an attractive financial hub amid global economic and technological shifts, Maria and Raffini said.