The tax treatment of Luxembourg Private Foundations is different depending on the fact that the founder is resident and non-resident in Luxembourg.
For residents, the Law seeks to establish a level playing field with the taxation of inheritance and gifts in direct ownership.
For non-residents there is generally no taxation except for Luxembourg situated properties
Tax regime of the Foundation itself
The Law also defines the tax regime which applies to the Private Foundation.
In relation to direct income taxes, the Law establishes the Foundation as a separate taxable entity independent of the founder or his dependents, beneficiaries or administrators. The Foundation is a taxable body like a normal taxable company but it is exempt of income taxes on three categories of income: