Luxembourg.

Luxembourg operates a French-derived civil-law inheritance system. The substance of succession follows the Code civil luxembourgeois, with réserve héréditaire protecting descendants. Inheritance tax (droits de succession) was originally established by the Law of 27 December 1817 and amended by the Law of 28 January 1948, with subsequent updates. Critically, transfers between spouses and to direct descendants in the direct line are generally exempt; the tax falls primarily on collateral and unrelated beneficiaries at progressive rates.

Luxembourg’s role in cross-border estate planning is shaped by its function as a private-banking and fund-management hub. The SOPARFI (Société de Participations Financières) and SPF (Société de Gestion de Patrimoine Familial) are widely used for family-wealth structuring. The Luxembourg life-insurance contract (contrat d’assurance-vie luxembourgeois) provides a sophisticated wealth-management instrument with cross-border portability. Luxembourg is bound by EU Succession Regulation 650/2012.

The memoranda in this series address the recurring fact patterns in Luxembourg cross-border estate planning — including the spouse-and-direct-line exemption from droits de succession, the réserve héréditaire tension with Canadian and US testamentary freedom, the US–Luxembourg 1996 Estate Tax Treaty mechanics, the Canada–Luxembourg 1999 income-tax treaty’s silence on estate matters, SOPARFI and SPF structures for cross-border families, and the Luxembourg life-insurance contract as a planning instrument.