Despite a significant increase in state revenue, Luxembourg’s government faces a budget deficit of €339 million as of the end of September 2026. The country’s total revenue rose to €23.9 billion, marking a 9.9% increase compared to the same period last year. This growth was primarily driven by higher tax collections, with corporate income tax alone bringing in €3.3 billion, a 21.4% rise year-on-year.
The introduction of a new national Pillar 2 tax contributed €239 million to the revenue, while the solidarity tax increased by 9.1% to €610 million. Revenue from VAT also saw an uptick, reaching €4.7 billion, a 7.8% increase. Additionally, subscription tax revenue grew by 10.5% to hit €1.1 billion. However, customs and excise duties experienced a decline of 3.1%, totaling €1.8 billion.
Meanwhile, state expenditure climbed to €24.2 billion, rising by €1.98 billion or 8.9% from the previous year. The surge in spending is attributed to heightened transfers to social security, municipalities, and the European Union budget, as well as increased public investment and employee remuneration.
The mismatch between revenue and expenditure underscores the fiscal challenges Luxembourg faces, despite robust revenue growth. The government must navigate these financial dynamics to address the deficit while continuing to support its economic and social commitments.