New Tax on Vacant Housing in Luxembourg: Bill Officially Tabled
The Luxembourg real estate market is set for a major legislative shift. At the impetus of the Minister of Housing, the Government has officially tabled a bill to introduce a national tax on vacant housing (TNV). This long-awaited measure aims to mobilize the existing housing stock to address the housing crisis affecting the country, from Luxembourg City to Esch-sur-Alzette.
A Tax to Boost Housing Supply
The primary objective of this new national tax on vacant housing is clear: to encourage property owners to put their homes back on the market, whether for sale or rent. According to recent STATEC estimates, several thousand housing units are currently unoccupied across the Grand Duchy, even as demand from residents and cross-border workers continues to grow.
Unlike the municipal taxes already in place in certain municipalities like Differdange or Dudelange, this tax will be uniform across the entire territory. It strengthens the legislative arsenal to combat property speculation and optimize the use of available land.
How Will Vacancy Be Defined?
The bill introduces strict criteria for defining property vacancy. A dwelling is considered vacant if it is not used as a primary residence by its owner or a tenant for a continuous period of six months.
Monitoring will be carried out through the national registry of natural persons. Authorities will cross-reference water and electricity consumption data to validate the actual occupancy of apartments in Kirchberg or houses in Gasperich. However, exceptions are provided:
- Major renovation works requiring a building permit.
- Admission of the owner to a nursing home or hospital.
- Properties intended for immediate sale or rent (under certain conditions).
The Tax Amount: A Progressive Calculation
The Government has opted for a deterrent amount to guarantee the effectiveness of the measure. For the first year of confirmed vacancy, the tax will amount to 3,000 euros per dwelling. This amount will increase by 1,000 euros each additional year, capping at 7,500 euros per year.
The revenue generated by this tax will not go into the general state budget. It will be reinjected into the Special Support Fund for Housing Development to finance new affordable housing construction projects.
What Impact for Investors in Luxembourg?
The announcement of this national tax marks the end of a certain form of real estate withholding. For investors owning prestige properties in Limpertsberg or the Cloche d'Or district, rental management becomes more crucial than ever. The bill also includes a mandatory declaration for owners whose properties remain empty.
Experts from the Chambre Immobilière point out that this measure could lead to an influx of properties on the secondary market in the short term, thereby providing opportunities for first-time buyers who are currently struggling to access homeownership in the face of persistently high prices per square meter.