Understanding property acquisition costs in Luxembourg
When purchasing property in the Grand Duchy of Luxembourg, the buyer must pay several categories of costs in addition to the purchase price. These acquisition costs, often incorrectly called 'notary fees', represent between 7% and 10% of the property price for existing properties, and can drop to 3-4% for new-build VEFA properties.
The main components are:
- Registration duties: 6% of the purchase price (existing) or land portion (VEFA), collected by the Registration and Domains Administration (AED).
- Transcription duty: 1% of the price, for land registry purposes.
- Notary fees: calculated on a degressive scale set by the Grand-Ducal regulation of 24 September 1987.
- Mortgage registration fees: 0.05% of the loan amount plus notarial fees on the mortgage deed.
The Bellegen Akt credit: tax reduction up to EUR 40,000
The Bellegen Akt (reduced-cost deed) is a major tax advantage granted to buyers of a property intended as their primary residence. Each buyer receives a credit of EUR 20,000 on duties. For a couple buying together, the credit doubles to EUR 40,000. This credit can be used only once in each person's lifetime.
Eligibility conditions:
- The property must serve as the buyer's primary residence
- Effective occupation must occur within 2 years of the deed
- The buyer must not have already used the credit
- The property must be located in Luxembourg
VEFA and VAT: the tax regime for new builds
Purchasing through VEFA (off-plan sale) benefits from a specific tax regime in Luxembourg. The construction portion is subject to VAT (not registration duties), while the land portion remains subject to 7% duties.
Applicable VAT rates:
- 3% (super-reduced rate): for the buyer's primary residence, subject to conditions, capped at EUR 50,000 in VAT savings.
- 17% (standard rate): for rental investments or beyond the cap.
Worked example: EUR 750,000 existing property purchase by a couple
A typical case: a couple purchases an existing apartment at EUR 750,000 as their primary residence, with a mortgage of EUR 600,000:
- Registration duties (6%): EUR 45,000
- Transcription duty (1%): EUR 7,500
- Gross duties: EUR 52,500
- Bellegen Akt credit (2 x EUR 20,000): -EUR 40,000
- Net duties: EUR 12,500
- Notary fees: ~EUR 6,800
- Mortgage costs: ~EUR 2,500
- Total acquisition costs: ~EUR 21,800 (2.9% of price)