LUXEMBOURGISH REAL ESTATE TAXATION 1

 18 rue Robert Stümper • L-­‐2557 Luxembourg T +352 26 38 92 40 • F +352 26 38 92 41
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LUXEMBOURGISH REAL ESTATE TAXATION 1. Acquisition of the real estate investment Selling of a real estate property under VAT regime The transfer of property in Luxembourg is exempt from VAT. However there is an exception concerning transfer of ownership of buildings where construction has not begun yet. It remains possible to elect for taxation if the following conditions are met: the transaction is between two persons who are subject to VAT, the real estate property will be used for activities giving right to deduct input VAT, an election form must be filed and the VAT authorities must allowed the election. The VAT standard rate is 15% (17% as from January 1st, 2015). Transfer tax and others acquisition costs Each direct purchase of real estate in Luxembourg is subjected to a registration duty (6-­‐9%) and a transcription tax of 1%. Net Wealth Tax Real estate properties located in Luxembourg held by a Luxembourg company or through a Luxembourg permanent establishment are subject to NWT levied annually at the rate of 0.5%. Acquisition of shares of a real estate corporation is in principle not subject to transfer duties. 2. Holding the real estate investment Rental activity Rental incomes are subjects to CIT at the standard rate (29.22% for Luxembourg city). Rental of real estate property is in principle VAT-­‐exempt but there are exceptions: -­‐ short terms rentals of accommodation in places the supplier as assigned for this purpose; -­‐ short terms rentals in hotels and camping areas; -­‐ letting of parking spaces except where ancillary to an exempt rental of a building; -­‐ letting of machines and business installations; -­‐ letting of safes. Distribution of profits Autorisation d’établissement du Ministère des Finances luxembourgeois n° 26/12 en tant que Professionnel du
Secteur Financier agréé par la Commission de Surveillance du Secteur Financier luxembourgeoise.
N° R.C.S. Luxembourg B 94364
TVA LU 19788437
ING Luxembourg S.A.
IBAN LU72 0141 3413 6050 0000
BIC CODE : CELLLULL
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18 rue Robert Stümper • L-­‐2557 Luxembourg T +352 26 38 92 40 • F +352 26 38 92 41
www.finimmo.com
As a general rule, dividends distributed by a local company to its shareholders have a withholding tax of 15% or reduced rate as provided by a tax treaty (0% provided that the Luxembourg participation exemption conditions are met). Dividends received by a Luxembourg company are subject to CIT at the ordinary rates (29.22% for Luxembourg City). 3. Selling the real estate investment In principle capital gains realized on the disposal of either the real property either the shares of a real estate oriented company are subject to CIT at ordinary rates (29.22% for Luxembourg city), unless the conditions of the Luxembourg participation exemption regime are met in case of sale of the shares. Also, this general rule will be subject to any other provision of an applicable tax treaty. The present document only has an informative purpose, and constitutes neither a tax advice, nor any part of a contract or an offer. Autorisation d’établissement du Ministère des Finances luxembourgeois n° 26/12 en tant que Professionnel du
Secteur Financier agréé par la Commission de Surveillance du Secteur Financier luxembourgeoise.
N° R.C.S. Luxembourg B 94364
TVA LU 19788437
ING Luxembourg S.A.
IBAN LU72 0141 3413 6050 0000
BIC CODE : CELLLULL
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