CGFP Demands Improvements to Luxembourg's Tax Reform After Meeting with Finance Minister Roth

Union Seeks Refinements to Government's Tax Plans

The General Confederation of the Civil Service (CGFP), Luxembourg's prominent civil servants' union, has called for significant improvements to the government's planned tax reform. Following a meeting with Finance Minister Gilles Roth on Friday, November 15, 2025, the CGFP offered a 'cautious, conditional welcome' to the reform's general principles but stressed that several critical questions must be resolved to prevent additional burdens on households.

The union's General Secretary, Steve Heiliger, outlined specific concerns, emphasizing that the move towards individual taxation should not result in a heavier financial burden for any household.

Key Demands and Concerns from CGFP

The CGFP highlighted several areas requiring clarification and adjustment within the proposed tax reform:

• Impact on Single-Income Households: The union is awaiting detailed proposals on how the reform will address single-income households and couples where one partner earns more than three-quarters of the total income, as these groups could be particularly affected.
• Treatment of Separated or Widowed Individuals: Concerns were raised regarding the fate of individuals who separate or whose partner dies, especially given the planned elimination of tax class 2. The CGFP questioned what provisions would be made for these individuals.
• Transition Period for Tax Class 2: The government's proposed 20-year transition period for phasing out Tax Class 2 was deemed 'far too short' by the union.
• Deductible Loan Interest: The CGFP argued that the current €672 ceiling for deductible loan interest is outdated and should be increased.
• Bracket Creep and Indexation: The union contended that adjusting tax brackets for only 6.5 index tranches is inadequate to counteract 'bracket creep'—the phenomenon where inflation pushes taxpayers into higher brackets. They called for a correction of at least eight tranches and demanded an automatic mechanism to adjust tax brackets whenever a new wage indexation is triggered, stating, 'Anything else would be nothing but a hidden tax increase'.

Government's Vision for Tax Reform

Finance Minister Gilles Roth's proposed tax reform aims to introduce a single tax category for all individuals, regardless of marital status, with the goal of achieving fairer and more modern taxation in Luxembourg. The current system, which is based on separate taxation of spouses' income and provides advantages to single breadwinner families, is considered outdated. The unified tax scale is expected to be based on the current tax class 1A and replace the existing three tax classes.

The reform is slated to come into effect on January 1, 2028, with the draft law anticipated by the end of 2026. While the reform is projected to cost between €800 and €900 million, the government has ruled out introducing a higher top tax rate, which will remain at 42%. An estimated 15% of individuals currently in tax class 2 (married individuals under 65) could face increased tax liability, depending on the income gap between partners, for whom a transition period of up to 20 years is being considered.

Context and Ongoing Dialogue

The CGFP, representing over 34,000 members across Luxembourg's public sector, is recognized as the sole representative union in the public service. The union welcomed the Finance Minister's openness to dialogue, noting that such constructive engagement is 'not currently the case everywhere' within the government. The reform also includes other measures such as new social and fiscal mechanisms, including provisions for pension contributions for stay-at-home spouses and tax deductions for working beyond mandatory pensionable service. Earlier legislative efforts by Minister Roth in July 2024 also included a reduction in corporate income tax and adjustments to the profit-sharing bonus regime and expat tax policies to enhance Luxembourg's attractiveness.