Real estate levy for investment vehicles
On 20 January 2022, the Luxembourg Tax Authorities (LTA) issued an administrative circular (Circular L.I.R. n° PRE_IMM n° 1, Circular) regarding the new real estate levy so-called “prélèvement immobilier” as introduced by article 4 of the Luxembourg Budget law for 2021 dated 19 December 2020 (Budget Law for 2021) and applicable to real estate income or gains realized by certain investment vehicles.
The Circular gives some guidance regarding the scope of the new real estate levy and particularly with regard to the reporting obligations which must be completed by the investment vehicles.
- Reminder of the new real estate levy for investment vehicles
Since the 1st of January 2021, Specialized Investment Funds (SIFs) established under a corporate form, Reserved Alternative Investment Funds (RAIF) subject to the SIF regime[1] and established under a corporate form or an Undertaking for Collective Investment (UCI) established under a corporate form and governed by part II of the law of 17 December 2010 (collectively, Fund Vehicles) are subject to a 20% real estate levy on income and gains derived from real estate located in Luxembourg, which must be declared by 31 May of the subsequent calendar year (for instance, income and gains derived from real estate located in Luxembourg must be reported in 2021 must be reported by 31 May 2022 at the latest). For more details about the scope of this tax measure, please refer to our Tax News published in October 2020.
- Reporting obligations
As regards the reporting to be done by 31 May 2022, Fund Vehicles must inform the LTA through a dedicated form (Form) [2] in the following cases:
- Fund Vehicles which have held Luxembourg real estate assets directly or indirectly during the calendar years 2020 and 2021. This includes Luxembourg real estate assets held by Fund Vehicles through one or more partnerships/common funds (FCP); or
- Fund Vehicles which have not held Luxembourg real estate assets directly or indirectly during the calendar years 2020 and 2021. This includes Luxembourg real estate assets held by Fund Vehicles through one or more partnerships/FCP; or
- Any Fund Vehicle which has changed its legal form during the calendar years 2020 and 2021 and became a tax transparent entity[3] to the extent that such Fund Vehicle has held directly or indirectly (i.e. through a partnership or FCP) at least one Luxembourg real estate asset at the time of the change of tits legal form.
Fund Vehicles must file the Form at the latest by 31 May 2022 via the LTA website (MyGuichet.lu), as otherwise they might be exposed to a penalty of up to EUR 10,000. Furthermore, the real estate levy for calendar year 2021 must be paid by 10 June 2022 at the latest.
We can assist you to assess how the reporting obligation applies to your Fund Vehicle and if needed, assist with the filing of the Form.
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We trust you find this publication useful and welcome the opportunity to answer any questions or comments you may have with respect to its contents. Kindly note that this publication does not constitute any legal or tax advice.
Partner
E: raffaele.gargiulo@vancampenliem.com
Partner
E: andrew.devries@vancampenliem.com
Counsel
E: eduardo.trancho@vancampenliem.com
Senior Associate
E: gabriel.amar@vancampenliem.com
Christina StrauvenAssociate
E: christina.strauven@vancampenliem.com
Associate
E: Diego.GonzalezManso@vancampenliem.com
Assia SadkiAssociate
E: assia.sadki@vancampenliem.com
[1] Article 45 of the RAIF law.
[2] «ACD (Prélèvement immobilier) : Déclaration informative sur la détention ou l’absence de détention d’un bien immobilier sis au Grand-Duché de Luxembourg et sur le changement de forme juridique».
[3] Transparent entities within the meaning of Article 175 of the Luxembourg income tax law (LITL) or FCP.