Each commune in the Grand Duchy of Luxembourg is authorised to levy a municipal tax (property tax) on immovable property, whether built on or not, situated within the limits of the commune.

Property tax is a tax assessed on property ownership, irrespective of how the property is used (private residence, commercial use, mixed use, etc.) or the sources of the financing used by the taxpayer to acquire it (owned or borrowed capital). The person liable for the property tax for the entire year is the owner of the property (and not the tenant) on 1 January. If the property belongs to several people, they are jointly liable to pay the tax. Each year, a property tax statement is sent to the owner(s), specifying the amount to be paid and the payment schedule.

Who is concerned

Any owner of a building, or of agricultural or forestry land, situated within the limits of a commune in the Grand Duchy of Luxembourg must pay the property tax set by this commune.

When property tax is paid by a farmer, a merchant or a commercial company for a property used in connection with an agricultural or commercial activity, this tax is considered as a business expense and is deductible along with other business expenses. Property tax is deducted from taxable income, under the category of agricultural/forestry profit or industrial and commercial profit, whenever it relates to a property that is part of the invested net assets of an agricultural or forestry undertaking or a commercial enterprise.

Property tax charged on a property asset used for rental income that is part of a taxpayer’s personal investment portfolio is also deductible as an expense for the acquisition of income.

How to proceed

Criteria used to calculate the property tax

The criteria used to set the amount of property tax are:

• the unit value assigned to the property by the Property Valuation Section of Luxembourg Inland Revenue (Administration des contributions directes – ACD);
• the multiplier applied for property tax set by each commune;
• the category of property asset (single-family house, agricultural or forestry land, commercial property, etc.).

In principle, the following criteria have no bearing on the amount of tax due:

• the owner's family status (married, single, number of children);
• the owner's income;
• the owner's occupational status (individual, merchant, commercial enterprise, etc.);
• the owner's domicile (in the commune where the property is situated; in another commune of the Grand Duchy of Luxembourg or abroad).

Determination of the tax base

The basis for calculating the property tax is called the tax base. It corresponds to the unit value assigned to each property multiplied by the assessment rate.

Establishment of the unit value

All immovable property, whether built on or not, situated within the Grand Duchy of Luxembourg, is assessed for tax purposes. The Property Valuation Section of Luxembourg Inland Revenue (Administration des contributions directes – ACD) classifies all buildings and land depending on their use and then assigns a unit value to each specific property. When a unit value is assigned to a property, a notification is sent to the property’s owner, in the form of a 'unit value and property tax base statement'. This notification is also sent to the tax authorities and to the relevant communal administration. This notification is issued in the year following the purchase, in the case of an existing building, or in the year following the completion of construction, in the case of a new building.

The unit value assigned by the ACD to a given property serves as the tax base, which must be multiplied by the assessment rate.

To establish the unit value, the ACD distinguishes between agricultural or forestry land and other immovable property, whether built on or not. The latter is divided into 6 categories:

• commercial buildings;
• mixed-use buildings;
• buildings for other uses;
• single-family houses and houses divided into flats;
• properties not built on, other than residential building plots;
• residential building plots.

Residential building plots are building plots that have been deemed eligible to receive building permits for at least 3 years and on which construction works have not been launched. It is therefore not necessary for the owner to have already requested a building permit. The commune needs only to have identified the plot as a residential building plot, and to have determined that a building permit may, in theory, be granted.

Each commune must draw up a list of these building plots as at 1 January each year. This list must be sent to the ACD’s Property Valuation Section no later than 31 January of the same year. The list includes certain details relating to the building plots, including: the location of the plot within the commune, the designation of the plot as it appears in the land registry, its area in square metres, the name(s) of the owner(s), and the date of the plot’s classification as a residential building plot.

When a plot is included in this list, the unit value is set at the key date of 1 January or, if applicable, 1 January of a following year. The tax base applicable to the property asset is equal to the unit value multiplied by the assessment rate.

Establishment of the assessment rate

The assessment rate depends in particular on the type of property asset—agricultural and forestry land, other immovable property (whether built on or not)—and its location. For single-family houses, the rate varies from 0.7 % to 1 %. For residential building plots, the rate is set at 1.5 % for the first 2 years of classification in this category and 10 % from the third year.

Calculation of the property tax

The property tax is calculated by multiplying the tax base by the communal rate.

Each year, the communes set the communal rates for property tax applicable for agricultural and forestry land and for other immovable property, whether built on or not. The tax applying to agricultural and forestry land is known as property tax A, and the tax applying to other immovable property is known as property tax B.

In addition, communes can set different rates for some or all categories of immovable property other than agricultural and forestry land, whether built on or not. The property taxes corresponding to the 6 categories of immovable property other than agricultural and forestry land are as follows:

• B1, applicable to commercial buildings;
• B2, applicable to mixed-use buildings;
• B3, applicable to buildings for other uses;
• B4, applicable to single-family houses and houses divided into flats;
• B5, applicable to properties not built on, other than residential building plots;
• B6, applicable to residential building plots.

By way of example, Luxembourg City’s communal rates for tax year 2013 were as follows:

The rates applied by the different communes, once approved by the Grand Duchy, are published each year in Mémorial B, the second series of Luxembourg’s official gazette.

Payment of the property tax

The commune where the property asset is located sends the owner a property tax statement each year specifying the amount to be paid and the payment schedule. Property tax is payable for the entire year by any taxpayer who was the owner of the property at 1 January of that year.

The quarterly property tax payment dates are usually 15 February, 15 May, 15 August and 15 November. The amount to be paid in each quarter thus corresponds to one-fourth of the total property tax. As an exception to the preceding, the payment dates for property tax are 15 November when the annual amount due is less than EUR 55, and 15 May and 15 November when the annual amount due is greater than EUR 55 and less than EUR 110.

Any claims relating to the information provided on the property tax statement must be submitted to the council of mayors and aldermen of the commune in question. However, any claims relating to the information provided in the tax assessment statement must be submitted to the Director of Luxembourg Inland Revenue.

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