KLEYR GRASSO
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
In Luxembourg, there are no restrictions on transferring real estate property to foreign entities.
Foreign natural and legal persons may freely own and occupy real estate or own shares in companies that own immovable property.
Reference must be made to the framework established by the EU for the screening of foreign direct investments (“FDI”) under regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 (the “Regulation”), which applies in all EU Member States from 11 October 2020. The aim of this framework is to review an FDI on critical infrastructure including real estate crucial for the use of such infrastructures and its potential effects on security or public order. The Luxembourg law on FDI screenings entered into force on 1 September 2023.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
There are no restrictions on lending for the purchase of real estate by foreign companies in Luxembourg.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
The transfer of real estate is subject to a registry tax (“droit d’enregistrement”), which is assessed on the purchase price or the effective value of the real estate property (if the latter is higher than the purchase price).
For the purchase of a residential property concluded between 1 October 2024 and 30 June 2025, a 50% reduction in registration and transcription fees is being granted.
Such reduction is also applicable to the purchase of a residential property between 1 July 2025 and 30 September 2025 if the preliminary sales agreement has been registered between 1 October 2024 and 30 June 2025.
The registry tax amounts to 6% (7.2% in case of an acquisition for the purpose of resale, but in case of a resale after 2 or 4 years, 6% respectively 4,8% of the registry tax can be recovered).
A municipal surcharge of 50% on the value of the registration duties (the tax being capped at 10%) is also due where the property is located within the municipality of Luxembourg City (residential properties are exonerated in most circumstances).
In addition, the buyer must pay a transcription tax (“droit de transcription”), which amounts to 1% of the purchase price or the effective value of the real estate property (if the latter is higher than the purchase price).
Generally, real estate transfer is not subject to VAT, unless it concerns the transfer of ownership of real estate, which is not yet constructed. Notarial fees are determined by grand-ducal regulation and depend on the type of transaction and the amount involved.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier) - who is not the owner
Natural or legal persons who own real estate in Luxembourg are subject to property tax on a yearly basis. The property tax amount is calculated by the relevant communal authority.
A new property tax reform (bill of law n°8082) foresees the creation of new registers in order to identify every unoccupied housing and unbuilt land as well as the introduction of a revised property tax, a new tax on unbuilt land and a new tax on unoccupied housing.
Rental income derived from lease contracts is taxed at ordinary progressive tax rates in case the landlord is an individual or at normal corporate income tax rates if the landlord is a corporation.
The burden of the taxes cannot be passed to someone other than the owner, except by a private contract, which only produces its effects between the concerned parties, but not in relation with the administrations.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
Tax breaks and incentives exist under Luxembourg law for natural or legal persons who buy real estate, but there are no specific breaks and incentives for foreigners in particular.
How is the ownership of Real Estate evidenced in your jurisdiction?
Ownership of real estate property can be proven by means of the notarial deeds registered by the AED (“Administration de l'enregistrement, des domaines et de la TVA” - AED) and transcribed in the “Mortgage Registry” (“bureau des hypothèques”).
Anyone may request an extract from the “Mortgage Registry” containing all relevant transcriptions/inscriptions on the real estate asset or request a copy of the inscription/transcription of the documents submitted for inscription/transcription.
In addition, anyone may order (electronically) an extract of the Land Registry and Topography Administration (“administration du cadastre et de la topographie”) either in electronic or paper format.
Moreover, a certificate of real estate ownership can be issued on request by the Department of Real Estate Assessments (Section des évaluations immobilières - SEVI) of the Tax administration (ACD).
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
It is not possible to keep the identity of real estate owners confidential. The Land Registry is public.
In Luxembourg, the Land Registry and Topography Administration (“Administration du cadastre et de la topographie”) provides public information on the ownership of land.
Like the owners, any interested party may also request an extract from the “mortgage registry” containing all relevant transcriptions/inscriptions on the real estate asset or request a copy of the inscription/transcription of the documents submitted for inscription/transcription or ask for an extract of the land registry.
Furthermore, the Law of 25 September 1905 on the transcription of real property rights sets out the principle that real estate transactions must be published.
Please note that identifying a legal person as a real estate owner by the methods described above does not imply the disclosure of its shareholders’ identity.