Definitely every city gets a buff from every luxury on empire. Only getting a buff from the local ones would be strange; it would almost imply no intra-empire trade whatsoever. I'm saying each city would be No. Luxuries on empire, multiplied by some function of that city's size.
So larger cities get more happiness from luxuries than smaller cities. If you individuated the happiness from luxuries back down to each city, then cities below your empire's average size would get more happiness, and your large cities, like your capital, would get very little benefit.
That makes sense. The more I think about this the more I feel it's the best way forward. Global happiness was easily the least popular aspect of civ 5, and remains the single bane of VP - perhaps we kill it?