Luxembourg’s state revenue surged by 9.9% to reach €23.9 billion by the end of September 2026, compared to the same period last year. However, despite this significant increase in revenue, the country is grappling with a budget deficit of €339 million, as state expenditure outpaced income.
The boost in revenue was largely driven by tax collections. Corporate income tax revenue saw a substantial rise, reaching €3.3 billion, up 21.4% or €582 million from the previous year. The solidarity tax also contributed to the increase, growing by 9.1% to €610 million, while the newly introduced national Pillar 2 tax brought in €239 million.
Additional revenue streams showed positive growth as well. Value-added tax (VAT) receipts increased by 7.8% to €4.7 billion, and subscription tax revenue climbed 10.5% to €1.1 billion. However, not all areas saw an uptick; customs and excise revenue fell by 3.1% to €1.8 billion.
On the expenditure side, state spending stood at €24.2 billion, marking an 8.9% rise from the previous year. The main drivers of increased spending included higher transfers to social security, municipalities, and the European Union budget, as well as increased public investment and employee remuneration.
Despite the strong revenue growth, Luxembourg’s financial situation highlights the challenge of balancing income with rising expenditures, resulting in a notable budget deficit as of the end of the third quarter in 2026.