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Taxes

Real estate taxes in Luxembourg

In this article, we will explore the general taxation of real estate in the country. Investment in real estate in Luxembourg is quite popular because of the constantly growing demand, but it implies some limitations and contributions. Let's find out more.

Last time updated
10.11.24

In the Grand Duchy, the responsibility for setting property taxes lies with the municipality where the property is located. Each commune determines its own tax rates and regulations, which means that the tax treatment of properties can vary from one commune to another.

Regarding the types of property subject to taxation in Luxembourg, they include various categories such as residential properties (houses, apartments), commercial properties (office buildings, shops), undeveloped land, agricultural land, and even certain types of movable property in specific cases.

Taxable property categories

When it comes to taxable property categories, they are divided based on their nature and use. Residential properties are generally assessed differently than commercial properties or agricultural land. Each category has its own criteria for taxation, and the applicable tax rates may also vary.

The 2 main taxable property categories are:

  • category A for agricultural and forestry properties
  • category B for all other properties.

Mostly, the real estate owners in Luxembourg are falling into the second category. Depending on the commune, category B, therefore, includes 6 classes of property:

  1. commercial buildings;
  2. mixed-use buildings (commercial & residential);
  3. buildings for other purposes;
  4. houses and apartment buildings;
  5. properties not built on except residential building plots;
  6. residential building plots.

What property is not taxable

In an effort to promote public welfare and facilitate essential services, the government has defined certain categories of property that are exempt from taxation. These exemptions cover a range of valuable assets, including:

  • state and municipal property used for public services,
  • buildings owned by charitable organizations,
  • medical facilities operated by hospitals and religious orders.

Interesting fact. In addition, infrastructure assets such as engineering works, railway lines and roads, as well as administrative property belonging to the CFL, have been designated as eligible for tax relief.

How to calculate your real estate taxes

In Luxembourg, the calculation of property tax involves several factors. The specific method may vary depending on the type of property and the commune where it is located.

Generally, the property tax calculation is based on the property's cadastral income and the applicable tax rate set by the commune.

Cadastral income is an estimate of the rental value of a property determined by the land registry

It represents the annual income that the property is deemed to generate. The cadastral income is adjusted periodically to reflect changes in the rental market.

Communal tax rates are applied based on where and which property is located

The rates are usually published on the websites of the commune (for example, Luxembourg City), or in official governmental sources. Unfortunately, most of them are in French, so it is recommended to contact the commune directly or get in touch with professional tax consultants for more clear information.

To calculate the property tax, the cadastral income is multiplied by the tax rate set by the commune

The resulting amount represents the annual property tax liability. It's important to note that each commune has the authority to set its own tax rates, so the rates can vary between different areas of Luxembourg.
Example

let's say a property has a cadastral income of 10,000 euros, and the commune where it is located has set a property tax rate of 5%. 

There may be variations and additional factors involved in the property tax calculation for specific types of properties or situations. For instance, certain exemptions or deductions might be applicable, such as exemptions for first-time homebuyers or deductions for energy-efficient renovations. These factors can influence the final amount of property tax payable.

Also, currently, there is a new reform underway, that must come live in 2026. It will change the model of land evaluation and ease the process somehow. A special simulation, that concerns Luxembourg citizens, is already available for this new model. If you want some forecasts, you can check out the calculator.

When to pay real estate taxes

The payment frequency for taxes depends on the tax amount owed.

  • If the tax is below 55 euros, the full annual amount must be paid by November 15.
  • For sums ranging from 55 to 110 euros, two payment dates are applicable — May 15 and November 15, with each payment being half of the total annual amount.
  • If the tax exceeds 110 euros, there are four payment dates — February 15, May 15, August 15, and November 15, with each payment being a quarter of the annual amount.

Property transfer tax in Luxembourg

Property transfer tax, also known as stamp duty, is a tax imposed when ownership of a property is transferred from one party to another. The purpose of this tax is to generate revenue for the government and cover administrative costs associated with property transactions, such as the registration of ownership changes.

This tax falls into the category of income taxes, and the tax rates and thresholds for property transfers in Luxembourg can change over time, so staying updated with the latest information is essential.

There are two factors, that matter in the case of property transfer taxation.

Residency status
Period of ownership

In certain cases, when an individual transfers his or her property to the State, a municipality, or an association of municipalities, the length of ownership becomes irrelevant. This transfer is covered by the Housing Pact and is exempt from income tax.

When calculating transfer tax, it typically involves applying a percentage to the property's value. The real estate transfer tax in Luxembourg is 7% of the value.

For example, if the transfer tax rate is 7% and the property value is 500,000 euros, the transfer tax would amount to 35,000 euros. Read more about additional costs when buying a house in our related article.

Luxembourg property income taxation

Property income tax is mostly relevant to property investors and landlords in Luxembourg. It is a tax on the income generated from owning and renting out properties. Taxable income from property includes

  • rental income, which is the amount received from tenants, and
  • capital gains from the sale of a property, which refers to the profits made from selling a property at a higher price than its purchase price.

The applicable tax rates for property income in Luxembourg depend on various factors, including the type of property and the taxpayer's overall income. But as a rule, the property income is taxed at a usual progressive rate.

Luxembourg Inland Revenue also charges long-term care insurance — contribution à l'assurance dépendance (CADEP) — at the rate of 1,4%. Taxpayers are only liable to pay the CADEP on income from assets and net income from pensions or annuities if they are eligible for long-term care insurance.

Deductions or allowances may be available to offset certain property ownership and management expenses, such as property maintenance costs or mortgage interest payments. These deductions can reduce the taxable income and, ultimately, the tax liability.

How to file property income taxes for residents

Property income tax in Luxembourg has reporting requirements and deadlines. Taxpayers need to declare their property income and file the appropriate tax forms within the specified timeframe, which can vary based on individual circumstances.

You have to file a tax return with real estate income mentioned by the 31st of March of the year following the year in which the tax is due.

When the rented property is solely owned by the residenttaxpayer or jointly owned with a spouse/partner or a minor child, the taxpayer is required to fill out Form 190, specifically designed for reporting income from the rental of built properties.

Application form 190
PDF
Form 190 consists of two pages and includes information about the owner, their income on the property, and deductible expenses. You can download and use the 190 Form in French with the link below.
FR
Form 190 consists of two pages and includes information about the owner, their income on the property, and deductible expenses. You can download and use the 190 Form in French with the link below.
Download

If resident taxpayers co-own a rental property, they must complete two forms to declare their rental income. The first form is Form 210, which deals specifically with rental income from co-owned buildings. This form allows taxpayers to provide detailed information about their rental income and expenses in relation to the co-owned property.

In addition, they must also complete Form 200, known as the Declaration for Joint Reporting of Income from Joint Business Enterprises and Co-owned Properties. This form allows taxpayers to jointly report their income from the co-owned property and any other joint business ventures they may have.

How to file property income taxes for non-residents

Non-resident property owners or investors may have additional considerations to take into account. A non-resident taxpayer who owns a rental property in Luxembourg is generally required to declare the rental income (which is not exempt) on the income tax return form.

However, if a non-resident taxpayer owns a rental property abroad and opts to be treated as a resident taxpayer when filing his income tax return, he must declare the rental income (which is exempt) from the foreign property.

There are no further differences between residents and non-residents:

  • If the property is solely owned or owned jointly with a close family member — fill out Form 190.
  • If the property which generates income is co-owned — fill out Forms 200 and 210.

In case you have multiple properties, you must fill out forms separately for each one of them. You can always contact the professional tax adviser for better results.

faq

Frequently Asked Questions (FAQ)

What are the main categories of taxable properties in Luxembourg

Are there any types of property that are exempt from taxation in Luxembourg

How is the property tax calculated in Luxembourg

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We took photos from these sources: Luxtoday illustration with Canva, Étienne Beauregard-Riverin on Unsplash

Authors: Penelope, Daria
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