LUXEMBOURG – Update on dwelling VAT

Bill of law 8149, which was tabled in the Chamber of Deputies on 8 February 2023, has been withdrawn from the Chamber of Deputies’ register of cases.

However, according to the 2023-2028 coalition agreement published on 20 November 2023, the new Luxembourg Government wishes to improve the existing system and will consult the European Commission on the possibility to extend the 3% dwelling VAT rate.

It will be necessary to closely follow this topic.

As a reminder, the provisions of Bill of Law 8149 were as follows:

Bill 8149 provided for the scope of the super-reduced 3% rate to be extended for the creation of dwelling. Currently reserved only for dwellings used as main residence by the owner, the super-reduced rate would have applied to any creation or renovation of a dwelling used as a main residence, regardless of who occupies it.

The bill also recommended amending the Grand-Ducal regulation of 21st December 2012 to increase from EUR 50,000 to EUR 100,000 the amount of the related tax benefit per dwelling created or renovated.

Other tax measures were also proposed to support and boost the real estate market in Luxembourg.

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