Even though you may not pay tax on any capital gains, you are required to declare any sale of a house, flat or building plot.

Which sales should be reported?

Whether you are resident or not in Luxembourg, you are obliged to declare, via a dedicated form or on your tax return, any capital gain realised from a property sale in Luxembourg. The same applies if you are resident in Luxembourg - or considered a resident taxpayer - but sell a property abroad. However, this does not mean that you will pay tax on this capital gain.

What taxation on capital gains?

Generally speaking, in Luxembourg, two types of capital gains are exempt from income tax: on the one hand, capital gains from the sale of a principal residence; on the other hand, capital gains from the sale of a property to the State, communes and communes' associations. For the rest, capital gains are subject to different tax treatment depending on whether the sale takes place less than two years or more than two years after the property was acquired. In the first case, the capital gain, considered as a speculative profit, is taxed at progressive rates, depending on the annual taxable income and the family situation of the seller. The maximum rate is 40 %.

If the property or land you are selling was purchased more than two years ago, the Luxembourg tax authorities refer to it as a capital gain. In this case, the interest rates are, at most, half of the overall rate, i.e. 20.5 %. If the sale takes place between 1^er July 2016 and 31 December 2017, this rate may not exceed 10.25 %.

In practice

Once you have made your declaration, the tax authorities will calculate your contribution. The sale of property is subject to three types of tax: solidarity tax, dependency insurance and temporary budget balancing tax.

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