Luxembourg Trade Associations

Chambre Immobilière Du Grand Duché de Luxembourg (CIGDL)
B.P. 2363
Luxembourg
L-1023
Luxembourg

Phone : +352 437475
Fax : +352 437477
e-mail : whein@pt.lu
Web : www.cigdl.lu

The Real Estate Chamber of the Grand Duchy of Luxembourg (CIGDL) was established in 1971 to represent the real estate profession in Luxembourg and abroad. Over 70 Luxembourg real estate professionals currently belong to the chamber, specialists in development, housebuilding, valuation, and property management. The Chamber guarantees that its members will abide by the code of professional ethics which it instigated in the interests of the industry and the general public.

Luxembourg Land Rights

The government in Luxembourg retains certain rights in real property. Real property is subject to taxation  and real property ownership is constrained by the government’s right to control the use of private property through zoning.

Unless otherwise agreed upon by parties in marriage contract, community property includes all assets acquired during marriage. Assets that husband/wife owned prior to marriage, or acquired during marriage by inheritance or gift, do not form part of community property.

Real property may be acquired by accession (increase of existing land by act of nature), contract, or inheritance (adverse possession, which must be continuous, public, unequivocal and peaceful). Transfers of real property interest by contract must be notarial act and recorded in the Mortgage Registry.

There are no restrictions on ownership on foreign ownership of real property in Luxembourg.

Luxembourg Forms of Ownership

Private and community property is allowed. The two main corporate vehicles in Luxembourg are the société anonyme (SA) and the société à responsabilité limitée (SARL). Both forms are limited liability companies, and both forms may acquire, hold, or convey real property interests.

Partnerships may also hold title to real property. In a general partnership (société en nom collective, or SNC) all partners are personally, jointly and indefinitely liable for the partnership’s debts. In a Limited Partnership (société en commandite simple, or SCA) the limited partners are liable only up to the amount of their capital contributions.

Joint Ventures - May also be used to acquire hold or convey real property.

Luxembourg Real Estate Info Summary

A sales agreement is concluded at the moment there is mutual consent between vendor and purchaser as to the identity of the asset sold, even if that asset does not yet exist, the transfer of ownership then being deferred, and as to the price. The price must be either already fixed, or determinable by reference to factors that are independent of the will of the parties. Oral sales contracts are possible, as a written contract is not necessary for the sale to bind the parties.

The property transaction is always registered and recorded in the notary's deed. A public notary will present the sale deeds for recording in this register. You would then be expected to pay duty within 15 days of signing.

The general law of contracts is found in civil code in Luxembourg. Under Luxembourg law, nearly all contracts are formed by agreement and without formality. Contracts for the sale of real estate however, require a notarial deed and must be registered and transcribed at a mortgage registry office.

A written contract, or "sales agreement" is used to conclude a buyer/seller agreement, which is also governed by the law. Oral contracts to bind both parties are also accepted. Please note that it can be notoriously difficult to find a home for sale in Luxembourg due to population and demand with "for sale boards" not being widely used.

Property Taxes:

Ad Valorem
The real estate tax (impôt foncier) is levied annually by municipalities. The tax varies according to the type and location of the property, and ranges from approximately 0.81% to almost 8% of the assessed standard value. The transfer tax is 6%. If the object is mortgaged and additional 1-% mortgage recording fee is charged. Capital gain is charged on the inflation's adjusted capital gains.

Real Estate Transfer Tax
A real estate transfer tax is charged on all sales of real property. The standard transfer tax is 6% of the value of the real property. Sales of real property subject to a mortgage are subject to an additional 1% mortgage register recording fee.

Capital Gains
In general, capital gains are considered ordinary business income and are subject to tax at normal rates when they are realized however, certain exceptions to full taxation of gains are allowed. Tax on capital gains may be deferred under certain circumstances if the sales proceeds are reinvested, within a two year period, in similar fixed assets that are used for business purposes in Luxembourg. However, capital gains taxes will always be levied when real property is held less than 2 years. The amount of gain is the difference between the selling price and the purchase price of a property and is adjusted for inflation.

Principal residences are not subject to capital gains tax.

Luxembourg Mortgages & Financing

A mortgage (droit réel) on real property secures a debt or obligation. A mortgage remains on real property until defeated, even if the ownership of the property changes hands. The notarial deed creating a mortgage lien must specify the nature and location of each real property owned by a debtor which will be mortgaged. Exact consideration must appear in the mortgage deed.

Luxembourg is a financial stronghold with many banks and institutions offering both local and international services. Mortgages can be found over various repayment terms with 80% and beyond being available. These can also be arranged for payment over agreed periods, for instance 20-30 years.