Luxembourg 3 % housing VAT: conditions and AED procedure 2026
Housing VAT concerns eligible works used for a principal residence under the amended regulation of 30 July 2002. It is not a general reduction of a home’s purchase price.
01Principle and applicable rate
Housing VAT concerns eligible works used for a principal residence under the amended regulation of 30 July 2002. It is not a general reduction of a home’s purchase price.
The benefit is limited to EUR 50,000 per dwelling. At rates of 17% and 3%, the theoretical saving is 14% of the eligible net base, capped by the remaining allowance. VAT payable is standard VAT minus that benefit. A change of owner does not mean the full allowance is available again: check the property’s record with the tax authority.
02Eligibility conditions
Since 2015, the benefit for creation is reserved for the owner’s principal home. Creation includes construction, conversion into housing and extensions. Renovation may also concern a third party’s principal home, such as a tenant’s. A second home does not meet the required use.
The tax authority distinguishes renovation within five years of acquisition regardless of age, and renovation of a dwelling at least ten years old. The label “renovation” alone is insufficient: check the category, works and applicable deadlines. Furniture, fitted kitchens and notarial, architectural or consulting-engineer fees are among the exclusions from the housing VAT scheme. Use and occupation must satisfy the scheme’s conditions. The brochure specifies, in particular, principal-residence use within two years of completion and two years of occupation. Non-compliant use can lead to repayment of the benefit and statutory interest.
03Procedure with the AED
Direct application: the supplier and owner request approval before the relevant works start, for a quotation of at least EUR 3,000 excluding VAT. The request describes the dwelling, use and works; after approval, the supplier invoices authorised works at 3%. Online filing uses the supplier’s professional account with the owner’s mandate.
Refund: after the works, the owner claims the difference on eligible expenses invoiced at the standard rate, providing itemised invoices and payment evidence. Each invoice must reach EUR 1,250 excluding VAT and the claim EUR 3,000 excluding VAT. The brochure states at least six months between claims and a five-year limitation from 31 December of the relevant year. This is separate from prior approval.
04Worked examples
Fictional examples: the entire net base is eligible, use meets the conditions and the full EUR 50,000 allowance remains available. No land, professional fees or excluded works are included. The table does not establish eligibility.
| Eligible net base | Standard VAT | Benefit applied | VAT due | Gross cost |
|---|---|---|---|---|
| 30 000 EUR | 5 100 EUR | 4 200 EUR | 900 EUR | 30 900 EUR |
| 100 000 EUR | 17 000 EUR | 14 000 EUR | 3 000 EUR | 103 000 EUR |
| 300 000 EUR | 51 000 EUR | 42 000 EUR | 9 000 EUR | 309 000 EUR |
| 400 000 EUR | 68 000 EUR | 50 000 EUR | 18 000 EUR | 418 000 EUR |
| 500 000 EUR | 85 000 EUR | 50 000 EUR | 35 000 EUR | 535 000 EUR |
Simulate your VEFA with the 3% housing VAT
Off-plan: enter a price excluding VAT. This mode assumes no construction completed at the deed, all construction eligible and the full €50,000 VAT benefit still available for personal occupation. Started projects or previously used benefits need an individual statement.
Run the VEFA simulationFrequently asked questions
Short answers to the most common questions on this topic.
What is the 3% VAT benefit cap in Luxembourg?
The benefit is limited to EUR 50,000 per dwelling. At rates of 17% and 3%, the theoretical saving is 14% of the eligible net base, capped by the remaining allowance. VAT payable is standard VAT minus that benefit. A change of owner does not mean the full allowance is available again: check the property’s record with the tax authority.
Is prior authorisation required for the 3% VAT?
Direct application: the supplier and owner request approval before the relevant works start, for a quotation of at least EUR 3,000 excluding VAT. The request describes the dwelling, use and works; after approval, the supplier invoices authorised works at 3%. Online filing uses the supplier’s professional account with the owner’s mandate. Refund: after the works, the owner claims the difference on eligible expenses invoiced at the standard rate, providing itemised invoices and payment evidence. Each invoice must reach EUR 1,250 excluding VAT and the claim EUR 3,000 excluding VAT. The brochure states at least six months between claims and a five-year limitation from 31 December of the relevant year. This is separate from prior approval.
Does the 3% VAT apply to a buy-to-let investment?
Since 2015, the benefit for creation is reserved for the owner’s principal home. Creation includes construction, conversion into housing and extensions. Renovation may also concern a third party’s principal home, such as a tenant’s. A second home does not meet the required use.
Does the 3% VAT apply to renovation?
The tax authority distinguishes renovation within five years of acquisition regardless of age, and renovation of a dwelling at least ten years old. The label “renovation” alone is insufficient: check the category, works and applicable deadlines. Furniture, fitted kitchens and notarial, architectural or consulting-engineer fees are among the exclusions from the housing VAT scheme.
Can the 3% VAT be combined with the Bëllegen Akt and Klimabonus?
Each scheme retains its conditions and ceiling. Bëllegen Akt covers duties; the VAT benefit covers eligible works. Check other grants, their timing and combination rules separately; this guide does not calculate automatic combined eligibility.
How is a mixed-use dwelling treated?
For mixed use, the tax authority’s brochure grants the benefit on the whole when the principal-residence area exceeds three quarters of the total; at three quarters or less, it is proportional to the relevant area. Check the dwelling and accessory-space classification. This guide does not apply a 400 m² floor-area ceiling.
Official sources
Statutes, circulars and publications consulted for this guide.
Related tools
Complete your analysis with these other tevaxia tools.
Off-plan: enter a price excluding VAT. This mode assumes no construction completed at the deed, all construction eligible and the full €50,000 VAT benefit still available for personal occupation. Started projects or previously used benefits need an individual statement.
Partial fee estimate under documented rules. The credit uses the €40,000 ceiling confirmed by the law of 3 July 2025. The increase to €45,000 announced in July 2026 is not included without confirmation that it has entered into force.
Detailed new-build cost by item.
Each scheme retains its conditions and ceiling. Bëllegen Akt covers duties; the VAT benefit covers eligible works. Check other grants, their timing and combination rules separately; this guide does not calculate automatic combined eligibility.
Related articles
Continue reading with these complementary guides.
Tax credit on registration duties for first-time primary residence acquisition.
Registration duties, transcription, notary fees and mortgage costs explained in detail.
Conditions, financing, taxation and specifics for buying in Luxembourg as a non-resident.