Luxembourg’s state revenue has seen a significant boost, reaching €23.9 billion by the end of September 2026, marking a 9.9% increase compared to the same period last year. This rise, amounting to an additional €2.2 billion, is largely attributed to increased tax collections, with corporate income tax revenue alone rising by 21.4% to €3.3 billion. The new national Pillar 2 tax also contributed €239 million to the state’s coffers.
However, despite this robust revenue growth, Luxembourg faces a budgetary challenge. State expenditure also increased, climbing by €1.98 billion, or 8.9%, to €24.2 billion. This was primarily driven by higher transfers to social security, municipalities, and the European Union budget, alongside increased public investment and employee remuneration.
As a result of these spending levels, the central government recorded a budget deficit of €339 million as of September 30, 2026. The deficit highlights a critical fiscal imbalance, with expenditure outpacing revenue even amidst substantial income growth.
Other sources of revenue also showed notable increases. Value-added tax (VAT) receipts grew by 7.8% to €4.7 billion, and subscription tax revenue rose by 10.5% to €1.1 billion. On the downside, revenue from customs and excise taxes saw a decline of 3.1%, totaling €1.8 billion.
The current fiscal scenario underscores the challenges Luxembourg faces in managing its budgetary commitments and expenditures, despite experiencing healthy revenue growth. The government will need to address this deficit while maintaining its economic policies and public investments.