Luxembourg Council of State greenlights carried interest draft law

Today, the Luxembourg Council of State withdrew its formal objection to the carried interest draft law, which seeks to clarify and modernise the Luxembourg tax regime applicable to carried interest received by individual managers of alternative investment fund managers. This withdrawal follows governmental amendments adopted by Parliament’s finance committee on 14 November 2025, addressing the previously overly broad and imprecise scope of beneficiaries under the proposed regime.

As a result, the draft law is now ready to be submitted for a vote during a plenary session of Parliament.

Due to the year-end holiday period, the draft law is expected to be adopted in early 2026 and apply as of the 2026 tax year.

In this Alert, our Tax Partners, Keith and Petya, analyse today's Council of State opinion.