The financial centre remains one of the pillars of the national economy. This is no surprise, as the mantra is repeated tirelessly on every stage. Once again, at the presentation of the 2026 budget, Gilles Roth reiterated it from the outset: it represents a quarter of GDP, 73,000 jobs and almost a third of tax revenue. In his view, this weight justifies special attention from the government in the 2026 budget. “The financial centre remains a key driver of our economy. We need to consolidate it, diversify it and make it even more innovative,” the Minister told the House.
The first area of action concerns taxation. Mr Roth is not advocating radical reform, but a series of technical adjustments designed to maintain the financial centre’s competitiveness against its European competitors, particularly Dublin and Luxembourg.
The budget provides:
- a one-point cut in corporation tax, the latest stage in a gradual reduction path begun in 2023, with the next scheduled for 2027;
- exemption from subscription tax for ETFs (exchange traded funds), designed to make Luxembourg more attractive compared with Ireland;
- consolidation of the carried interest tax regime, framing the remuneration of alternative fund managers for greater legal certainty and clarity.
Mr Roth justifies these measures by the need to “preserve the credibility and predictability of the tax framework”, two conditions that he considers essential for the confidence of institutional investors.
Technological innovation: finance in the age of AI
The second pillar is technological. Luxembourg wants to accelerate the digitalisation of the financial sector, in line with its “FundTech Nation” strategy. The 2026 budget mobilises unprecedented resources to make digital transformation a lever for competitiveness.
A number of initiatives have been announced:
- the creation of a FundTech Accelerator, designed to support start-ups specialising in fund management technologies;
- the establishment of an AI Experience Center, a collaborative platform between public institutions, banks and fintech to experiment with the uses of artificial intelligence in finance;
- €424m of public investment by 2029 in AI, cloud and data, including €57m from 2026 to support the MeluxinaAI supercomputer and the Luxembourg AI Factory;
- a strategic partnership with Mistral AI, a French start-up backed by the State, to develop sovereign European artificial intelligence solutions.
The stated aim is clear: to make Luxembourg a European laboratory for digital finance. Roth speaks of a “finance of tomorrow”, combining technology, compliance and transparency.
First public issue on blockchain
Another major innovation, this time in the field of public finance: In 2026, Luxembourg will become the first European state to issue a digital treasury certificate on blockchain. The operation will serve as a pilot project to test the use of DLT (Distributed Ledger Technology) in public debt issues. The idea is to enhance traceability and reduce the operational costs associated with short-term government securities.
“We want to gain a concrete understanding of how technology can improve the transparency and efficiency of public procurement,” explained Roth.
A modernised sovereign wealth fund
The Minister also detailed the new guidelines for the Intergenerational Sovereign Wealth Fund. This fund, designed to secure the State’s revenues over the long term, will now diversify its investments: Up to 15% of its assets may be allocated to alternative investments, such as private equity or technological infrastructure.
A notable feature: 1% of the portfolio may be invested in Bitcoin, a first at state level for a eurozone country. The minister points out that this is not a speculative strategy but an “experimental and cautious” approach aimed at “testing the potential of regulated digital assets”.
The fund is expected to reach €850m in assets by the end of 2026, an increase of €100m on 2025.
Financial diplomacy and international expansion
The budget also strengthens economic diplomacy: Luxembourg is aiming for a greater presence in multilateral financial institutions. The aim is to be represented in all regional development banks (Africa, Asia, Latin America) and to increase the number of double taxation agreements signed to 100 by 2027.
A budget of €14.5m, up 22%, is planned to finance seven international economic missions in 2026, with a focus on emerging markets and financial centres complementary to that of the Grand Duchy.
“Luxembourg must remain a place of innovation as well as stability”, he summarised. “It is in this balance that our strength lies.”
