VAT tax advantage

The normal tax rate of the VAT (value-added tax) amounts to 15%.

The government applies VAT rebates or the direct application of VAT at 3% in connection with the costs of building or refurbishing a residential property in order to stimulate the creation of housing. The property must be mainly for residential purposes.

• The specially reduced 3% VAT rate can be charged directly on all works related to the building or extension/renovation of a property intended for use as a main home.
• The redemption of the difference between the normal tax rate and the VAT at 3%. The company, contracted to carry out the work, submits an application for the redemption of the VAT, countersigned by the client, to the Land Registry ("l'Administration de l'enregistrement et des domaines").

The amount of the VAT rebate may not exceed 60,000€.

If the VAT applies to the renovation of a recently acquired property, the work must be completed within 5 years of the acquisition.

Source : www.logement.lu, Date : 11.04.2011, internal translation