Luxembourg’s 2025 reforms support startups with new tax credits, public funding, talent access, and AI infrastructure; building strong conditions for founders to grow and scale locally.
In 2025, Luxembourg is implementing a comprehensive strategy to enhance its startup ecosystem. A combination of tax reforms, strategic funding, and talent attraction aims to curb the growing trend of local startups relocating abroad and to attract foreign founders looking for a strong European base. The message is clear: Luxembourg wants to be a home where startups can thrive and scale.
A key component of this transformation is draft law no. 8526 introducing the Start-Up Tax Credit. From 2026, individuals investing at least €10,000 in young, innovative, non-listed companies will benefit from a 20% personal income tax credit, capped at €100,000 annually. While non-refundable, the unused portion can be carried forward. This scheme is tightly regulated: investors must hold their shares for at least three years, have no employment or founding ties to the company, and may own up to 30% of its paid-up share capital. If the shareholding exceeds this limit, only the portion up to 30% qualifies for the tax credit.
Eligible companies must be less than five years old, employ under 50 staff, and remain below €10 million in revenue or total assets. Their innovative profile must be evidenced by R&D spending making up at least 15% of operational costs in one of the past three years and the employment of two full-time staff.
“Luxembourg wants to be a home where startups can thrive and scale.”
Michaël Duval, Director, Head of Innovation at Baker Tilly
Complementary public measures reinforce this commitment. In May 2025, a €200,000 spin-off grant will support academic or industrial research conversion into viable businesses. Up to 80% of project costs may be covered through state co-financing. This is designed to accelerate the transformation of intellectual capital into market-ready solutions.
In parallel, €300 million will be deployed over five years via the SNCI to fuel startup ventures. Recognizing that financing alone is not enough, the government also plans to launch a national Talent Desk by the end of 2025. This one-stop platform will ease the administrative path for highly skilled international professionals, reinforcing Luxembourg’s attractiveness for global talent.
On the technological front, the AI Factory will act as a collaborative space for startups to explore applied AI using cutting-edge resources, including the MeluXina-AI supercomputer. These initiatives are clearly designed to make Luxembourg not just a launchpad, but a true base for innovation-led growth.
Against this backdrop of structural reform, startups will need to adapt rapidly. That’s where Baker Tilly Innovation comes in. As the only advisory structure in Luxembourg dedicated entirely to startups, it offers hands-on support across strategic planning, fundraising, tax compliance, and digital transformation. With tailored tools and a strong connection to the local and international ecosystem, Baker Tilly Innovation helps founders turn these new opportunities into sustainable business success.
This article was published in Silicon Luxembourg magazine.
