On Thursday 7 May 2026, Luxembourg’s Chamber of Commerce published its opinion on the draft law introducing a single tax class.
In a press release, the Chamber of Commerce said that the reform, which aims to fundamentally transform the taxation of individuals by replacing the current tax classes with a single system applicable to all taxpayers from the 2028 tax year onwards, and forms part of the 2023-2028 Coalition Agreement “Lëtzebuerg fir d’Zukunft stäerken” (“Strengthening Luxembourg for the future”), is likely to strengthen Luxembourg’s attractiveness but not without risks for certain profiles and for public finances.
The Chamber of Commerce welcomed the introduction of the new tax scale which, for certain categories of taxpayers, would help strengthen Luxembourg’s attractiveness and highlighted that young talent – mainly subject to tax class 1 – could benefit from the more competitive tax framework, helping position the country as an attractive international destination.
The Chamber of Commerce noted that although a transitional period of 25 years is planned for taxpayers currently taxed jointly (tax class 2), this would not cover all situations, particularly those involving cross-border or posted workers, who could be excluded for reasons beyond their control.
Furthermore, the Chamber of Commerce stressed that the cost of the tax reform has raised significant concerns. Where, in an already constrained budgetary context, it believed the reform could dangerously worsen the public deficit, while the expected multiplier effect would likely remain very limited.
The Chamber of Commerce also noted that there is a contextual gap between the Coalition Agreement signed in 2023 and the current situation, marked by a sharp increase in public expenditure, particularly defence spending, current public expenditure and the impact of demographic transition. It also highlighted the absence in the financial statement of any simulation or modelling of the expected macroeconomic effects and expressed surprise at the lack of savings measures capable of at least partially offsetting a “tax loss” of this scale, namely an annual net cost estimated at between €800 million and €900 million.
Given the scale of the changes brought about by the reform, the Chamber of Commerce recommended making practical tools available, such as a calculator or tax simulator, enabling taxpayers to carry out simple guided simulations of the reform’s tax impact according to their personal circumstances and income.
It also called for greater flexibility, notably the possibility of choosing the single tax class retrospectively via the income tax return.
The Chamber of Commerce said: “Without questioning the need to modernise taxation, the Chamber of Commerce expresses strong reservations regarding the budgetary sustainability of the reform in its current form. It considers that, given the global economic context, it would be appropriate for the Government to adopt a prudent budgetary approach.”
It added: “The reform comes in addition to a series of budgetary and fiscal decisions which have already had a significant impact on public revenue and expenditure. In its current form, it will significantly reduce the government’s financial room for manoeuvre in the coming years, while numerous external risks could also weigh on public finances.”
In light of these issues, the Chamber of Commerce suggested exploring alternatives, such as adjusting the tax scale for tax class 1 or introducing specific tax measures in favour of low-income taxpayers, in order to achieve the intended objectives while preserving the balance of public finances.
