Buying Property in Luxembourg benefits from a favorable tax regime regarding real estate, attracting lots of interest.
and accordingly has attracted a lot of interest from those already living in or indeed simply interested in a in a stable . benefits from a favorable regime regarding , as well as a very healthy with steadily increasing
The Grand Duchy of Luxembourg is one of the Europe’s leading financial centres and a prime destination both for large corporations and individuals thanks to its political, economic and regulatory stability. Accordingly, the is extremely active and have seen a consistent positive return on .
Luxembourg also offers a favorable regime in connection to (e.g. low compared to neighboring countries, deductibility of ).
The most interesting and maybe less commonly known aspects regarding acquisition of in Luxembourg are as follows:
Sale before completion/off-plan sale (vente en l’état futur d’achèvement)
Off-plan sales are characterized by the conclusion of preliminary sale agreements (contrats de réservation) which are extensively regulated to protect the buyer’s rights. As Property Purchase experts in Luxembourg we have observed that almost all preliminary sale agreements concluded in the Grand Duchy of Luxembourg, even with well-known real estate developers, do not respect such regulation and are thus (i) much less protective of the buyer’s rights and (ii) bear the risk of being declared null and void by a Court.
One of the basic rules when buying property in Luxembourg: Buyers should know that preliminary sale agreements cannot, under any circumstances, provide for a down payment from the buyer to the seller. At most, 2% of the agreement value can be consigned to a specific bank account set up by the buyer.
Furthermore, the asset to be built and sold should be described with as much detail as possible in the preliminary sale agreement so that the buyer can more easily void the contract upon completion should the description not have been respected.
Preliminary Purchase Agreement (compromis de vente)
When the to be acquired already exists, the acquisition process usually first involves the conclusion of a preliminary sale agreement, followed by a of acquisition.
Depending on the location of the , buyers should be aware that the Luxembourg laws require the preliminary sale agreement to include specific provisions regarding urban and environmental regulations to be valid and lawful, however these are usually not mentioned in such agreements.
Where a company owns a , buyers can purchase the shares of the company instead of buying the directly.
This allows the buyers, subject to any change in legislation or practices of the competent authority, to avoid paying 7% to 11,2% of the acquisition price for ( droits d’enregistrement et de transcription ), rendering the transaction more attractive than a direct acquisition of the .
As this is a mere tolerance from the competent authority, we recommend to keep the asset between 2 or 4 years and not to resell it immediately. Otherwise registration taxes may apply.
Return on Investment
When considering your total ROI, you should bear in mind not just the but the overall in that there will inevitably be a number of to take into account. These would include (i.e. costs), and – which will depend on the , fees and any fees relating to a (requiring separate registration on the ), which will depend on the applicable to the loan.
If the you are investing in is a commercial or destined to be a , you may need to consider income on unless you are , in which case such income would be dealt within your existing corporate structure.
If in the future you are selling the , you may need to pay on any though this may depend on whether or not you are a in which case you may be entitled to a