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Luxembourg Tax Alert 2016-11

Luxembourg Tax Alert 2016-11



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New draft tax bill encouraging the disposal of land and properties in Luxembourg

The Luxembourg government previously announced a number of measures in relation to the 2017 tax reform (for previous coverage on all the measures announced in the frame of the tax reform, see our newsletters 2016-06 and 2016-09). One of the announcements intends to encourage the supply of land and homes in Luxembourg, with reduced tax rates for gains realised from the disposal of such real estate (other than the taxpayer’s principal property, which continues to be exempt from tax).

On 3 May 2016 the government published a draft tax bill concerning this measure. The draft bill sets out additional details of the intended measures:

  • The law covers gains realised during the period between 1 July 2016 and 31 December 2017
  • The scope of the new measures is limited to transactions on developed and undeveloped properties that are part of the private assets of taxpayers 
  • Where the land or property has been held by the taxpayer for more than 2 years prior to the disposal, the tax rate on the capital gain will be reduced to ¼ of the taxpayer’s global tax rate (from the current ½ of the taxpayer’s global tax rate) 
  • There will continue to be a tax-free allowance of EUR 50,000 (increased to EUR 100,000 for couples filing jointly), available over a 11-year period, to reduce the taxable gain, and this may result in a loss; the allowance will be EUR 75,000 for properties owned through direct inheritance, but this may not result in a loss 
  • The gain is taxable in the year of completion of the property disposal, regardless of the date of the payment from the sale. The date of completion of the property is the date shown on the notary deed, the date of judgment, or the date of the administrative act taking place.

Please note that for land and properties held for up to 2 years, the capital gain will continue to be subject to tax under the current rules.

We expect the bill to be debated in the Luxembourg parliament and enacted into law prior to 1 July 2016.

And for further information, please do not hesitate to contact us.





The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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