Establish a Trust in Luxembourg

If you want to create a trust in Luxembourg, you need to comply with a few requirements. Our local lawyers can assist with the drafting and submission of the documents for correct establishment.

Quick Facts
Specific law applicable to trusts (YES/NO)	2003 Trust Law
Participants in a  trust	– the settlor, – the trustee, – the beneficiary/ benefiaciaries
Types of trusts available for creation in Luxembourg	Fixed, discretionary, revocable, and irrevocable trusts. It is also possible to create family trusts in Luxembourg.
Documents required for establishment	Luxembourg trusts can be created through trust deeds.
Assets to be held in a trust	– movable property, – immovable property, – money
Requirements to create a trust	The founder must appoint the trustee and must disclose the name(s) of the beneficiary(ies). Also, the assets must be clearly specified in the trust deed.
Alternatives to a trust in Luxembourg (if any)	It is also possible to create family offices, limited partnerships, private foundations, and private placement life insurances.
Taxation of trusts	Trustees are subject to the income tax on locally earned income if they are Luxembourg residents. Inheritance taxes also apply on immovable property based in Luxembourg.
Recognition of foreign trusts in Luxembourg	Yes, foreign trusts are recognized in Luxembourg.
Possibility to create international trusts (YES/NO)	Yes
Other means to create trusts (if available)	Yes, by drafting testaments
Lifespan	Up to 100 years – The duration of the trust must be mentioned in the creation document.
Advantages of opening a trust in Luxembourg	– access to specialized trustee services, – it can be used as an estate planning tool, – it is also a good tax optimization method.
Trustee services availability (YES/NO)	Yes, in Luxembourg trustee services are offered by professionals.
Trust creation services availability (YES/NO)	Yes, you can rely on our Luxembourg lawyers for support in establishing a trust.

Who can set up trusts in Luxembourg?

• natural persons, Luxembourg citizens and non-residents;
• companies with local and foreign ownership.

What are the conditions to establish a trust in Luxembourg?

• the parties in the trust must be identified;
• all assets to be transferred for management to the trustee must be disclosed.

How can I create a trust in Luxembourg?

Trusts in Luxembourg can take various forms, among which the most popular are:

1. family offices which are great wealth management structures for large families, no matter if the members are Luxembourg citizens or not;
2. limited partnerships created with the purpose of holding the private assets of individuals;
3. private foundations can also be created with the purpose of ensuring the protection of personal assets;
4. family trusts which can take the form of special limited partnerships and which are protected by the Trust Law in Luxembourg;
5. private placement life insurances which are quite popular in Luxembourg as they are forms of investments for individuals and families.

No matter the type of trust you decide to create, our law firm in Luxembourg can help you draft the trust deed in accordance with the law.

Here is also an infographic on this subject:

Can I create an international trust in Luxembourg?

Yes. This type of trust allows foreign citizens who are not ordinary residents of Luxembourg to establish trusts here and to protect their assets in one of the largest financial centers in the world.

Foreign citizens can act as settlors, beneficiaries and even fiduciaries in Luxembourg international trusts. Also, the assets which can be protected by creating a trust in the Grand Duchy must not be transferred to Luxembourg, as they can be located anywhere in the world.

What are the parties to be identified in a Luxembourg trust?

• The settlor: the party creating the trust;
• the trustee: the party administering the assets;
• the beneficiaries: the party for the benefit of whom the trust was created.

NOTE: Other parties can also be appointed in a Luxembourg trust, such as protectors who can oversee that the wishes of the settlor are respected.

What document must I prepare when creating a trust in Luxembourg?

The trust deed or document.

Are there any registration requirements when setting up a trust in Luxembourg?

Yes, as follows:

• the trust deed must be registered with the Register of Trusts and Fiduciary Contracts, which is managed by the Luxembourg Tax Department;
• corporate beneficiaries must be recorded with the Beneficial Owners Register, when applicable (our Luxembourg lawyers can review your case and guide you accordingly).

How long does it take to establish a trust in Luxembourg?

The entire procedure can be completed in 2 to 3 weeks with the help of our law firm in Luxembourg.

NOTE: After creation, you must register the fiduciary contract with the Register of Trusts and Fiduciary Contracts within maximum one month.

What types of assets can I put in a trust in Luxembourg?

Any of the following:

• real estate;
• bank accounts;
• works of art;
• jewellery;
• company shares, etc.

What is the duration of a trust in Luxembourg?

A trust can be set up for up to 100 years in Luxembourg. The duration of the trust must also be specified in the document.

You can also watch our video on how to create a trust in Luxembourg: 

How are trusts taxed in Luxembourg?

The Tax Adaption Law and the General Tax Law in Luxembourg provide for the following when it comes to the taxation of trusts:

• the settlor will be taxed upon the transfer of assets to the fiduciary, according to Article 11 in the Tax Adaptation Law;
• the settlor can also be taxed on the assets acquired by the fiduciary through the fiduciary agreement;
• in the case of irrevocable and discretionary trusts, the entity itself can be subject to taxation if the beneficiary cannot be identified;
• certain registration fees also apply when it comes to the taxation of trusts, such as the transfer tax on the assets transferred from the trustee to the beneficiary;
• the trust is not subject to VAT payments in Luxembourg, according to the General Tax Law.

We also invite you to contact us if you are interested in setting up a trust in Luxembourg.