Property taxation in Luxembourg

The “Bëllegen Akt” (literally “cheap deed”) is a tax credit applied directly at the notary when the deed is signed. It neutralises registration and transcription duties on the purchase of your primary residence, capped at €45,000 per individual buyer — i.e. €90,000 for a couple purchasing jointly.

The credit is personal and non-transferable: each buyer can use it once in a lifetime, on a primary residence occupied for at least two years. An unused balance can, however, be preserved for a future acquisition if the first purchase did not consume the full €45,000.

In practice, most first-time buyers pay no registration duty at all on a standard flat: at 7% duty on a €500,000 property, the bill would be €35,000 — fully absorbed by a couple's credit. Beyond that threshold, only the excess remains due.

On the purchase of an existing property, the State levies 6% registration duty plus 1% transcription duty, i.e. 7% of the acquisition price, before applying the Bëllegen Akt. In the municipality of Luxembourg City, a municipal surcharge raises the effective rate to 10% (an extra 3%) — except for primary residences, which stay at 7%.

For an off-plan purchase (VEFA), duties apply only to the land share, not to construction works invoiced with VAT. This split significantly reduces the taxable base — a key point for any new vs. resale comparison.

Duties are payable at the notarial deed, withheld and remitted to the Registration, Estates and VAT Administration (AED). The Bëllegen Akt credit is deducted at source: the notary computes the net amount due.

Notary emoluments are set by an official tariff on a decreasing scale: around 1.0% to 1.5% of the price for a standard home, VAT included. Add disbursements (cadastral searches, planning, copies) and mortgage registration fees if you finance the purchase.

Expect 0.4% to 0.6% of the loan amount for registering the lender's privilege at the mortgage office. This formality protects the bank throughout the loan; it is released when the mortgage is paid off.

Typical provision to bring to closing: about 8 to 10% of the price for a financed existing property (duties + notary + mortgage registration), 3 to 5% for a VEFA. We build this envelope with every buyer before any offer.

When you buy off-plan (VEFA) or have your primary residence built, VAT on construction works is reduced from 17% to 3%. The advantage is capped at €50,000 per dwelling — roughly €357,000 of construction costs covered at the super-reduced rate.

The mechanism works in two ways: either direct 3% invoicing by the contractor (“direct application”) or later reimbursement by the AED (“reimbursement”). The choice is made via a file submitted to the Administration before works begin.

Core condition: the dwelling must be used as your primary residence for at least two years from occupation. A resale or change of use before that deadline triggers a pro rata clawback of the tax advantage received.

Municipal land tax remains modest in Luxembourg compared to its neighbours: around €100 to €300 per year for an upmarket flat, calculated on a historic fiscal unit value (rarely revised) × a municipal rate. A reform is planned in the medium term but the timeline remains uncertain.

Rental income is taxed at the progressive personal income tax scale, after deducting actual costs (loan interest, maintenance, taxes, building depreciation). A non-resident investor is taxed in Luxembourg only on Luxembourg-source income, with a tax treaty to avoid double taxation.

On resale, capital gains are exempt after two years if the property is your primary residence. Otherwise, a “speculative” gain (held under two years) is taxed at the full progressive rate; a “long-term” gain (over two years) benefits from a half-rate — roughly 21% at most.

€800,000 existing flat outside Luxembourg City, first-time buyer couple, primary residence, financed at 80%. Gross duties (7%): €56,000; Bëllegen Akt (€90,000 cap): -€56,000; net duties: €0. Notary fees (~1.2%): €9,600 VAT included. Mortgage registration on €640,000 (~0.5%): €3,200. Total acquisition costs: about €12,800, or 1.6% of the price.

Same property in Luxembourg City as a rental investment (not primary): gross duties 10% = €90,000, no Bëllegen Akt, notary ~€9,600, mortgage registration ~€3,200 — total ~€92,800 (11.6%). The gap between both scenarios shows why “primary residence” qualification is the number-one tax lever on a Luxembourg acquisition.

We produce this plan for every property studied with you, line by line, before any offer — duties, notary, mortgage, VAT where relevant, service charges, estimated land tax. The true cost of a purchase is never its sticker price.