Personal taxation · Luxembourg
Foreign rental property: how to declare it in Luxembourg
A property let abroad requires you to check the owner’s residence and the tax treaty with the State where the property is located. The income may have to be reported in Luxembourg even if it benefits from an exemption mechanism there. The relevant amount is not automatically the gross rent, nor the result taken unchecked from a foreign tax return.
Financial Services Luxembourg · Licensed accountant · Head of the firm: Mickaël LOC. Editorial update: .
The four starting points
- Country where the property is located and type of use.
- Tax residence of the owner for the year.
- Ownership share and periods of ownership or letting.
- Receipts, costs and the rules for determining the relevant income.
Two possible tax returns, two different logics
The tax return in the State where the property is located and the Luxembourg tax return meet separate obligations. The tax treaty sets out how the right to tax is allocated and how double taxation is avoided.
Withholding tax or tax already paid abroad does not allow you to leave out income without checking how it is treated. Nor does it automatically constitute a tax credit that can be offset in Luxembourg.
Fictitious example of a rate effect
A Luxembourg resident owns a home let in another State. If the applicable mechanism exempts this income while taking it into account for the rate, the income can change the tax on other income without being added directly to its taxable base.
You need to check the exact mechanism of the tax treaty and the relevant net income. Any losses are not deductible from Luxembourg salaries as a universal rule.
Documents and engagement
Gather leases, deeds, statements of rent and costs, interest, foreign taxes and the local tax return if available. A translation or a reconstruction of certain data may be needed.
The firm specifies the Luxembourg scope. The tax return in the State where the property is located and coordination with the local professional are not deemed to be included without agreement.
The firm’s other tax engagements
Depending on your situation, the firm also handles tax, VAT and payroll, the regularisation of late tax filings and assistance during a tax audit. Fees are listed in the firm’s fee grid.
Official sources and scope
- ACD: tax treaties in force
- ACD: privately owned property let out
- ACD: assimilation to residents, article 157ter
The rules apply to the year and profile concerned. Examples flagged as fictitious explain a method; they are not an individual validation. The documents and options of your file are covered by a separate engagement.