Articles

Luxembourg real estate levy: Compliance obligations for Luxembourg investment vehicles

Luxembourg real estate levy: Compliance obligations for Luxembourg in

Luxembourg real estate levy: Compliance obligations for Luxembourg investment vehicles

18.03.2022 LU law

The Luxembourg tax authorities (“LTA”) released a new circular on 20 January 2022 (PRE_IMM n°1) (the “Circular”) regarding the real estate levy previously introduced by the Luxembourg law of 19 December 2020 (the “Law”). 

As from 1 January 2021, a 20% real estate levy (the “Real Estate Levy”) applies to real estate income derived by certain Luxembourg tax opaque investment vehicles owning directly, or indirectly through tax transparent entities, real estate assets located in Luxembourg.

Scope of application of the Real Estate Levy

Personal scope

The Law targets the following tax opaque investment vehicles (“Investment Vehicles”):

  • Undertakings for collective investment (UCIs) falling under Part II of the amended law of 17 December 2010 concerning undertakings for collective investment;
  • Specialized Investment Funds (SIFs) referred to in the amended law of 13 February 2007; and
  • Reserved Alternative Investment Funds (RAIFs) referred to in art. 1 of the amended law of 23 July 2016

The Investment Vehicles should be considered as tax opaque when the take the form of an S.C.A., an S.A., an SE or an S.à r.l.

Material scope

The Real Estate Levy applies to the following forms of real estate income (“Real Estate Income”) to the extent received or realized by an Investment Vehicle:

  • Gross rental income generated by real estate located in Luxembourg;
  • Capital gains realized on the alienation of real estate located in Luxembourg; and
  • Capital gains realized on the alienation of interests in tax transparent entities holding real estate located in Luxembourg.

Compliance requirements

The Circular provides information regarding the reporting obligations of the Investment Vehicles in relation to the Law. 

An annual reporting

Each year, and to the extent an Investment Vehicle receives or realizes Real Estate Income derived from Luxembourg based real estate, a real estate levy return (ACD – Prélèvement immobilier: Déclaration pour le prélèvement immobilier) (the “Annual Reporting”) must be submitted by 31 May of the following year. The related Real Estate Levy must be paid no later than 10 June, i.e. a few days after the filing deadline. As an example, in relation to Real Estate Income of 2021, the Annual Reporting should be filed no later than 31 May 2022 and the levy should be paid no later than 10 June 2022). 

The Annual Reporting shall include the following information:

  • Amount of Real Estate Income derived from Luxembourg based real estate;
  • Breakdown of the Real Estate Income per real estate asset; 
  • Amount of Real Estate Levy; and
  • report from an independent auditor certifying the proper computation of the Real Estate Income.

A mandatory notification obligation

In addition to the Annual Reporting, a mandatory one-time notification (the “Notification”) has been introduced by the Law for calendar years 2020 and 2021, applying to all Luxembourg Investment Vehicles (as defined above), regardless of whether they hold Luxembourg real estate or not. All Luxembourg Investment Vehicles will have to notify by 31 May 2022 whether or not they held Luxembourg real estate during calendar years 2020 and 2021 (Prélèvement immobilier: Déclaration informative sur la détention ou l’absence de détention d’un bien immobilier sis au Grand-Duché de Luxembourg et sur le changement de forme juridique).

This Notification will confirm:

  • The ownership /absence of ownership of Luxembourg based real estate assets at any point of time during 2020 and 2021; and
  • The change (if any) of legal form at any point of time during 2020 and 2021, from a tax opaque to a tax transparent entity, to the extent the Investment Vehicle owned at least one Luxembourg real estate asset at the time of the change of legal form.

Non-compliance with the mandatory Notification may trigger a fixed fine of EUR 10,000.

To the extent an Investment Vehicle has performed the Annual Reporting by 31 May 2022, it will be considered as having complied with its mandatory Notification obligation. 

Need assistance?

Our tax team is available to assist you with the application of these rules and the performance of the related reporting obligations. 

Team

Related news

22.06.2022 NL law
Update FAQ: Gevolgen van het Didam-arrest voor de verkoop van onroerende zaken door overheden

Short Reads - Op 18 maart 2022 heeft de Rechtbank Midden-Nederland zich uitgelaten over de vraag of de gemeente Nieuwegein uitvoering mocht geven aan een onderhands tot stand gekomen koopovereenkomst met betrekking tot een onroerende zaak. In deze update bespreken wij deze uitspraak en gaan wij nader in op de overwegingen van de voorzieningenrechter.

Read more

27.06.2022 NL law
Kabinet wil schijnzelfstandigheid aanpakken door intensivering handhaving door Belastingdienst en uiterlijk per 1 januari 2025 opheffing van het handhavingsmoratorium

Articles - Op vrijdag 24 juni jl. hebben de Minister van Sociale Zaken en Werkgelegenheid (SZW) en de Staatssecretaris van Fiscaliteit en Belastingdienst een schriftelijke kabinetsreactie gegeven op de rapporten van de Algemene Rekenkamer (ARK) en de Auditdienst Rijk (ADR) over de handhaving op schijnzelfstandigheid door de Belastingdienst. Johan Vrolijk bespreekt in dit blogbericht de kabinetsreactie nadat eerst kort is ingegaan op de achtergrond, het geldende handhavingsmoratorium en de rapporten van de ARK en ADR.

Read more

22.06.2022 NL law
Update FAQ: Gevolgen van het Didam-arrest voor de verkoop van onroerende zaken door overheden

Short Reads - Op 18 maart 2022 heeft de Rechtbank Midden-Nederland zich uitgelaten over de vraag of de gemeente Nieuwegein uitvoering mocht geven aan een onderhands tot stand gekomen koopovereenkomst met betrekking tot een onroerende zaak. In deze update bespreken wij deze uitspraak en gaan wij nader in op de overwegingen van de voorzieningenrechter.

Read more

09.06.2022 LU law
Luxembourg tax authorities issue circular providing guidance on the special real estate allowance

Articles - On 30 May 2022, the Administration des Contributions Directes published a circular concerning the special real estate allowance [1] (the “Circular”). The Circular provides for some guidance on the computation of a special real estate rebate introduced by the Law of the 19 December 2020 [2] and applicable as from 1 January 2021 [3] (the “Allowance”).

Read more