LUXEMBOURG Law and Practice Contributed by: Romain Tiffon and Marie Bentley, ATOZ Tax Advisers
Registration Duties Registration duties in Luxembourg vary depending on the type of transaction or document. Transfers of Luxembourg real estate generally trigger a registra - tion tax of 6% (increasing to 9% for certain proper - ties in Luxembourg City), plus a 1% transcription tax, calculated on the higher of the purchase price or the property’s fair market value. These taxes are deduct - ible for corporate income tax purposes. Certain corporate law formalities – such as the incor - poration of a Luxembourg entity, amendments to its articles of association, or the transfer of its registered seat to Luxembourg – are subject to a fixed registra - tion duty of EUR75. When real estate is contributed to a company in exchange for shares, the contribution is subject to a proportional registration duty of 0.6% (or 0.9% for some Luxembourg City properties), plus a 0.5% transcription tax. If the consideration consists of something other than shares, the proportional duty increases to 6% (or 9% in Luxembourg City), and the transcription tax to 1%. Certain reorganisations may benefit from exemptions from proportional duties. Contributions of movable property remunerated by means other than shares are also subject to a pro - portional registration duty, with the applicable rate depending on the nature of the assets contributed. 2.9 Other Notable Taxes Property tax (IFON) is a local tax on the value of real estate situated in Luxembourg. On 10 October 2022, a draft law was submitted to Luxembourg’s parliament to advance the long-anticipated reform of the national property tax system. A key element of the reform is the creation of a new property valuation model designed to enhance objectivity, transparency and fairness. The reform also introduces two additional taxes aimed at addressing the country’s growing housing shortage: a land mobilisation tax (IMOB) intended to promote timely residential construction on designated plots and a national tax on vacant housing (INOL) to incen - tivise the return of unoccupied dwellings to the mar - ket.
ble up to the total of such expenses, including interest on acquisition debt or write‑downs of the participa - tion. Taxpayers may waive the participation exemption under certain conditions, but only when the eligibility requirements are met through the EUR6 million acqui - sition cost threshold; the exemption cannot be waived where the 10% shareholding requirement is satisfied. A waiver must be exercised separately for each tax year and each shareholding. Finally, rollover relief may also apply – subject to spe - cific conditions – where capital gains realised on cer - tain assets are reinvested into qualifying replacement assets in accordance with Article 54 of the LITL. 2.8 Other Taxes on Transactions VAT VAT in Luxembourg applies to the following: • supplies of goods and services; • intra‑Community acquisitions made by taxable persons in the course of their business; and • imports from outside the EU. The standard VAT rate is 17%. A taxable person is anyone who independently and regularly carries out an economic activity. Luxembourg also applies several reduced rates. • An intermediate rate of 14% applies to items such as fuels, certain advertising publications, and services relating to the administration or custody of securities. • A reduced rate of 8% applies to gas, electricity and, under certain conditions, works of art and their supply. • A super‑reduced rate of 3% covers a wide range of goods and services, including broadcasting ser - vices, copyrights, most food products, books and periodicals, children’s clothing, water, pharmaceu - ticals, passenger transport, accommodation, and access to cultural, educational, sporting, entertain - ment events and e‑books. • Finally, a zero rate applies principally to exports and intra‑Community (interstate) supplies of goods.
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