Last updated more than 5 years ago
Luxembourg communes are authorised to levy and collect a special annual tax on unoccupied or unused buildings and on vacant development land.
The purpose of this tax is to encourage owners to sell or rent their unused property or erect residential buildings on their land.
Currently, only the following 5 communes have enacted a regulation introducing the special tax on unoccupied buildings and vacant development land: Beckerich, Diekirch, Esch-sur-Alzette, Esch-sur-Sûre and Redange-sur-Attert.
Who is concerned
The special tax is payable by any owner of or, in the case of the separation of ownership attributes, any usufructuary of, or holder of leasehold or emphyteutic rights to:
- existing buildings or portions of existing buildings intended to be used as housing or accommodation and that are effectively unoccupied or unused. A building is determined to be unoccupied if no one is listed in the population registers as occupying the building, or if no one is identified as occupying the building as a secondary residence, for a period of 18 consecutive months;
- building plots that have been deemed eligible to receive building permits for at least 3 years and on which construction works have not yet commenced. It is therefore not necessary for the owner to have already applied 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.
When several persons are the co-owners of a building, or the co-holders of the leasehold or emphyteutic rights, they are jointly and severally liable to pay the special tax.
Communes may, at their discretion, waive the payment of the special tax, either in full or in part, especially in the following cases:
- a building or planning project for the purpose of residential occupancy;
- recently acquired property;
- property used for an agricultural business;
- a building plot or a dwelling reserved for personal residential or occupancy purposes by the owner of the plot themselves, or any of the owner’s children, for a period of time to be set by communal regulation.
Each commune may also enact regulations requiring owners of unoccupied buildings or portions of buildings in their communes, intended to be used for housing, to declare them to the communal administration within a time limit set by the communal council.
Owners who fail to fulfil the declaration requirements risk a fine of between EUR 1 and EUR 250.
How to proceed
Notification of the special tax and appeals
The party required to pay the special tax is notified by the council of mayors and aldermen,by registered letter, of the substantiated facts leading to the determination of the tax. The letter is sent to the domicile (for an individual) or registered office (for a company or organisation) of the taxable party for the property in question (owner, usufructuary, holder of the leasehold or emphyteutic rights), and specifies the amount of the special tax due. If the domicile or registered office of the taxable party is unknown, the notification may be made in the form of a notice posted at the site of the property in question.
Any taxable party who wishes to challenge the application of the special tax must submit a claim within 3 months of the date of notification or the date on which the notice was posted at the site of the property. This claim must be sent by registered mail in the form of a substantiated letter (for example, specifying and proving that the building is effectively occupied or has been occupied over the 18-month period used by the communal administration to establish the tax). The communal administration has 3 months to rule on the taxable party’s claim. The absence of a reply within this time limit means that the claim has been accepted.
Payment of the special tax
The taxable party must pay the tax upon receiving the assessment statement. This statement is sent by the communal tax authorities for the commune where the property is situated. Appeals lodged with administrative courts have no suspensive effect on the payment of the tax.
Luxembourg law provides that decisions concerning the introduction of the special tax as well as the procedures for its application, be established by communal regulation. Accordingly, regulations may vary from one commune to the next.
Application of the special tax
In its first year of application, the tax is governed by specific rules.
If the taxable party does not challenge the application of the tax within 3 months of receiving notice thereof, or within 3 months of the date on which a notice is posted at the site of the property, the tax is due for the first time in respect of the year during which the 3-month period came to an end.
Mr X is the owner of a flat that has been unoccupied since 1 June 2007.
He receives a letter from the communal administration on 1 February 2009, informing him that he will be subject to the special tax for his flat, which the authorities assert as having remained vacant for 20 consecutive months. Mr X does not challenge the application of the tax within the 3-month time limit (expiring on 1 May 2009). Consequently, he becomes liable to pay the special tax in respect of 2009.
If the date of notification had been 1 November 2009 (expiry of the 3-month period on 1 February 2009), Mr X would have been liable to pay the special tax for the first time in respect of 2010.
If the taxable party challenges the application of the tax within 3 months of receiving notice thereof, or within 3 months of the date of the posting of a notice at the site of the property, the tax is due for the first time in respect of the year during which the commune rejected the claim.
Mr X is the owner of a flat that has been unoccupied since 1 June 2007.
He receives a letter from the communal administration on 1 September 2009, informing him that he will be subject to the special tax for his flat, which the authorities assert as having remained vacant for 27 consecutive months.
Mr X challenges the application of the special tax by registered letter dated 15 November 2009. The communal administration rules on the claim by letter dated 20 January 2010, rejecting the arguments made by Mr X. Consequently, Mr X becomes liable to pay the special tax for the first time in respect of 2010.
Termination of the application of the tax
The special tax is no longer payable in the year following that in which the unoccupancy of the building came to an end. This fact may be noted by the commune or reported by the taxable party.
Obligations in the event of the sale of a property subject to the tax
In the event of the sale of a property subject to the special tax, the owner or the assignor of the rights must inform the buyer of the existence of this tax.
The seller is required to report to the communal administration, by registered letter and within 30 days of the signature of the deed of sale or transfer, the precise designation of the property subject to the special tax, the date of signature of the deed, the name(s) and address(es) of the acquirer(s) and the proof that the latter was or were informed that the property is subject to the special tax.
The former owner or the assignor remains liable to pay the special tax until such notification has been given.
The buyer or the assignee of the assigned rights has 30 days from the signature of the deed to inform the commune of their intention as regards the occupancy of the property.