Luxembourg’s Director of Taxes published a circular on 20 January 2022 reminding taxpayers about the rules governing the real estate levy.
The 2021 budget introduced a 20% real estate levy on the gross income derived by certain Luxembourg investment funds.
The circular reiterates the rules applying to a Luxembourg investment fund that is a “UCI Part II” fund, specialized investment fund (SIF) or reserved alternative investment fund (RAIF) that is not considered fiscally transparent under Luxembourg’s income tax law (i.e., the fund is in the form of a société anonyme (SA), société en commandite par actions (SCA) or société à responsabilité limitée (Sarl)). Such a fund, even if it is not a real estate fund, must inform the tax authorities as to whether it held any Luxembourg real estate (directly or through a tax transparent vehicle) in 2020 or 2021.
In addition, such a fund must inform the tax authorities whether it changed its legal form in 2020 or 2021 to become tax transparent (i.e., from a SA, SCA or Sarl to an SCS, SCSp or FCP). If so, the fund must inform the tax authorities whether it held directly or indirectly a Luxembourg-situs real estate investment at the time of the change in legal form.
The declaration must be submitted before 31 May 2022. Failure to comply will result in a fixed fine of EUR 10,000.