The Luxembourg Administration of Direct Taxes has issued Circular PRE_IMM n° 1 of 20 January 2022, providing guidance on the "real estate levy" that was introduced as part of Law of 19 December 2020 concerning the Budget for 2021. The 20% levy applies from 2021 on income from real estate situated in Luxembourg held directly or indirectly by investment vehicles with a legal personality distinct from those of its partners, including undertakings for collective investment (UCI), specialized investment funds (SIFs), and reserved alternative investment funds (RAIFs), but with the exception of those that are constituted in the form of a limited partnerships.
Income for real estate subject to the levy includes:
- Income from the rental of real estate in Luxembourg;
- Capital gains from the alienation of real estate (immovable property) in Luxembourg
- Income from the alienation of shares deriving value from immovable property in Luxembourg considering the share price in proportion to the value of the property.
In all cases, the proportion of ownership in the real estate is considered, including in cases of indirect ownership. Examples of determining the taxable amount in different cases is provided in the guidance.
Declarations (returns) for the real estate levy must be submitted by 31 May of the year following the calendar year in which the income is collected/realized. Declarations are made using the real estate levy form (ACD (Prélèvement immobilier): Déclaration pour le prélèvement immobilier), which must be filed via MyGuichet along with a certified report from an approved auditor. Payment of the real estate levy is due no later than 10 June of the year following the calendar year in which the income is collected/realized. The first declaration is due 31 May 2022 in respect of 2021 and the first payment is due 10 June 2022. Investment vehicles are also required to submit by 31 May 2022 information on whether or not real estate was held/owned in Luxembourg in 2020 or 2021 and whether there was any change in legal form.