New Carried Interest Regime Law Voted!

Today, the Luxembourg Parliament approved Bill of Law No. 8590, which modernizes the Luxembourg carried interest regime. 

The provisions of the Bill, as previously outlined in our newsflash, remain in substance unchanged. However, the Law as newly voted, incorporates amendments adopted by Parliament's finance committee on 14 November 2025, as detailed below. 

These amendments respond to the Council of State's request (subject to the Council of State's formal objection) for greater clarity regarding the scope of beneficiaries eligible for the carried interest tax regime. The Council had considered the original scope overly broad and imprecise, resulting in legal uncertainty.

As a result, the Luxembourg Parliament proposed a more precisely defined scope for beneficiaries under the new carried interest regime following which the Council of State withdrew its formal objection.

Accordingly, the new carried interest regime, as voted today, applies to individuals who either:

(i)        perform investment management functions for the AIF, whether under an employment contract or as a partner, manager, or director. This includes roles such as portfolio management and risk management, but excludes individuals engaged solely in administrative functions; or

(ii)        act as a service provider involved in AIF management under a consulting services agreement, which may be concluded directly by the individual or through one or more intermediary entities.

The Parliament requested the exemption from the second vote to the State Council which we expect should be granted so that the new carried interest regime will be applicable as from 1 January 2026.