Identifying and reporting income from the purchase or sale of shares or other securities
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Capital gains realised by resident taxpayers—or non-resident taxpayers under certain conditions—on investments held in their personal portfolios are taxable in Luxembourg.
A capital gain is the difference between the selling price and the purchase price of shares or other securities. This involves in particular the sale of shareholdings in Luxembourg companies (e.g. companies whose capital is divided into shares, or cooperative societies) or in foreign companies.
Capital gains must be reported on the taxpayer’sincome tax return. Capital gains are added to other income received by the taxpayer to determine their income tax liability.
Who is concerned?
The information provided on this page applies to:
- resident taxpayers who realise capital gains (or capital losses, where applicable) from Luxembourg and/or foreign sources;
- non-resident taxpayers who opt to be treated as Luxembourg residents for tax purposes, and who realise capital gains (or capital losses, where applicable) from Luxembourg and/or foreign sources.
How to proceed
Tax treatment of capital gains realised by resident taxpayers
The table below summarises the tax treatment applicable to capital gains realised by resident taxpayers. Income from capital gains is also subject to a 1.4 % long-term care insurance contribution. This contribution is levied by the tax authorities when issuing the taxpayer’s tax statement.
A shareholding in a company (company whose capital is divided into shares, cooperative company, etc.) is considered to be significant when the party disposing of the shareholding, either alone or together with their spouse/civil partner and minor children, has held more than 10 % of the company’s share capital, either directly or indirectly, at any time over the 5 years preceding the date of disposal/sale.
Capital gains realised during a calendar year in an amount less than EUR 500 are not taxable.
The EUR 50,000 allowance (doubled for married couples/civil partners who file jointly) is reduced by the amount of any allowances granted to the taxpayer and their spouse/civil partner over the 10 years preceding the tax year during which the taxpayer realised capital gains on the sale of shares or property assets.
| Shareholdings held for fewer than 6 months | Shareholdings held for more than 6 months | |
|---|---|---|
Shareholdings of less than 10 % of a company's share capital |
Taxation at ordinary progressive rates ranging from 0 % to 42.80 % or 43.60 % | Exemption |
Shareholdings of more than 10 % of a company's share capital (significant shareholding) |
Taxation at ordinary progressive rates ranging from 0 % to 42.80 % or 43.60 % | Taxation at half of the overall rate maximum rate of 21.40 % or 21.80 % and EUR 50,000 allowance (doubled for spouses/civil partners filing jointly) |
1. In 2008, a single (unmarried) taxpayer realised:
- a capital gain of EUR 10,000 on the disposal of a significant shareholding in a company (greater than 10 %) held for longer than 6 months; and
- a capital gain of EUR 30,000 on the disposal of a property asset held for longer than 2 years.
These capital gains were not taxable as they amounted to less than EUR 50,000. The taxpayer thus had a remaining allowance of EUR 10,000 (EUR 50,000 minus EUR 40,000).
2. In 2009, the same taxpayer realised a capital gain of EUR 15,000 on the disposal of a significant shareholding held for longer than 6 months. A capital gain in the amount of EUR 5,000 is therefore taxable (EUR 15,000 minus the remaining allowance of EUR 10,000).
For tax years 2010 to 2018 inclusive, the taxpayer will no longer be entitled to the allowance.
Capital gains can be offset by capital losses. However, capital losses cannot be offset against other categories of income and may not be carried over to the following tax years.
Reporting income from purchases and sales of shares or other securities as a resident taxpayer
Resident taxpayers who file an income tax return must report any capital gains (or capital losses, where applicable) realised in the year on page 11 of their income tax return ('model 100' form).
Taxpayers must enter the following information on their income tax returns, as established by documentary proof (for example, statements issued by Luxembourg and/or foreign banks):
- boxes 1101 / 1102 (row A): capital gains on the disposal of a shareholding of more than 10 % in a foreign or Luxembourg company—either a public limited company (société anonyme) or private limited company (société à responsabilité limitée)—held for longer than 6 months. A separate sheet with transaction details for all capital gains (and capital losses, where applicable) must be enclosed with the return, including the following information: the name of the company in which the taxpayer invested, the selling price, the purchase price, the purchase date, the date of disposal, and their percentage shareholding in the company;
- boxes 1105 / 1106 (row B.1): capital gains (or capital losses) on the disposal of a shareholding held for fewer than 6 months (regardless of the percentage shareholding). A separate sheet with transaction details for all capital gains (and capital losses, where applicable) must be enclosed with the return, including the following information: the name of the company in which the taxpayer invested, the selling price, the purchase price, the purchase date, the date of disposal, and the percentage shareholding in the company;
- boxes 1109 / 1110 / 1111 / 1112 (row B.2): capital gains on the disposal of a property asset.
Non-taxable capital gains (the total proceeds for the tax year are less than EUR 500 or exempt) are not reported on the taxpayer’s income tax return.
Reporting income from purchases and sales of shares or other securities as a non-resident taxpayer
In theory, capital gains on the disposal of shareholdings by a non-resident taxpayer are taxable in the latter’s residence country.
Only non-resident taxpayers who opt to be treated as Luxembourg residents for tax purposes may file an income tax return and report any capital gains (or capital losses, where applicable) realised in the year on page 11 of their income tax return ('model 100' form), with an impact on the average tax rate applying to taxable income from Luxembourg sources.
Non-resident taxpayers must enter the following information on their income tax returns, as established by documentary proof (for example, statements issued by Luxembourg and/or foreign banks):
- boxes 1103 / 1104 (row A): capital gains on the disposal of a shareholding of more than 10 % in a foreign or Luxembourg company—either a public limited company (société anonyme) or private limited company (société à responsabilité limitée)—held for longer than 6 months. A separate sheet with transaction details for all capital gains (and capital losses, where applicable) must be enclosed with the return, including the following information: the name of the company in which the taxpayer invested, the selling price, the purchase price, the purchase date, the date of disposal as well as the percentage shareholding in the company;
- boxes 1107 / 1108 (row B.1): capital gains (or capital losses) on the disposal of a shareholding held for fewer than 6 months. A separate sheet with transaction details for all capital gains (and capital losses, where applicable) must be enclosed with the return, including the following information: the name of the company in which the taxpayer invested, the selling price, the purchase price, the purchase date, the date of disposal as well as the percentage shareholding in the company.
- boxes 1109 / 1110 / 1111 / 1112 (row B.2): capital gains on the disposal of a property asset.
Non-taxable capital gains (the total proceeds for the tax year are less than EUR 500 or exempt) are not reported on the taxpayer’s income tax return.
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