Luxembourg Real Estate Withholding Tax/Tax Declaration Obligations for UCIs
The Luxembourg law of 19 December 2020 (hereafter “the Law”) introduced a real estate levy of 20% on real estate income realized by investment vehicles holding real estate located in Luxembourg directly, either through partnerships or through FCPs. As of the accounting year 2021, investment vehicles concerned will therefore have to file a tax return declaring the amount of real estate income generated for the calendar year and the amount of real estate levy.
I Real Estate Assets
The definition is broad and refers to Articles 517 to 526 of the Luxembourg Civil Code. Thus, all immovable assets are affected by virtue of their nature or destination and are deemed to be immovable property within the meaning of the Law.
II Definition of Income from Real Estate
- (Gross) rental income derived from Luxembourg real estate
- Capital gains from the disposal of Luxembourg real estate
Income from the disposal of shares held in an investment vehicle holding Luxembourg real estate
II Definition of Investment Vehicles
- Undertakings for collective investment or “UCIs” as defined in the law of 17 December 2010
- Specialized Investment Funds or “SIFs” as defined in the law of 13 February 2007 and
- Reserved Alternative Investment Funds or “RAIFs” as defined in the law of 23 July 2016
except for those set up in the legal form of a société en commandite simple or SECs.
IV Tax Reporting and Payment Obligation
The investment vehicle must file a tax return with the competent Luxembourg tax office no later than 31 May of the year following the year in which the real estate income as defined by the Law was generated. The return must contain the following information:
- the cadastral number,
- the vertical cadastral number,
- the type of real estate,
- the location of the real estate asset in Luxembourg (i.e. address),
- the type of organism through which the real estate income is realized (i.e. transparent entity or FCP),
the amount of real estate income subject to the real estate levy of 20%, a breakdown of real estate income by property and the amount of real estate levy withheld. In case of non-compliance with the modalities of the tax reporting and payment obligation, the Luxembourg competent tax office may unilaterally determine an insufficient amount of real estate income and the related real estate levy. The return must be completed by a certified report from an external auditor and submitted to MyGuichet (the Luxembourg e-filing process for filing tax returns). This special tax return is called “Déclaration pour le prélèvement immobilier”. The amount of the real estate levy must be paid no later than 10 June following the year in which the real estate income or gains were realized. If default of payment occurs, interest for overdue payment might be due.
V Additional Disclosure Requirements
In addition to the reporting and payment obligation, all investment vehicles, whether they do or do not generate real estate income, must file an additional tax return and indicate whether or not they hold Luxembourg real estate assets for the accounting years 2020 and 2021. The tax return is to be filed regardless of whether they directly or indirectly realize Luxembourg real estate income.
Investment vehicles are also required to file a tax return after a change of their legal status during the years 2020 and 2021, provided they held Luxembourg real estate asset during that period.
Failure to comply with the disclosure requirement, for which the deadline is 31 May 2022, may result in a lump-sum fine of EUR 10.000 by the Luxembourg competent tax office. The special return to be filed is called “Déclaration informative sur la detention ou l’absence de detention d’un bien immobilier situé au Luxembourg et sur le changement de forme juridique”.
VI How AIQUNITED Can Help?
AIQUNITED can take over all applicable reporting and tax filing obligations.
The following fees apply for filing the required tax returns:
- Tax reporting and payment obligation: EUR 750 per return
- Disclosure requirement: EUR 300 per return
Our fees will be charged with 5% office expenses and VAT.
 Article 4 of the law of 19 December 2020 implementing the 2021 Luxembourg budget and the Circular of the Tax Director of 20 January 2022.