The fulfilment of an aim set out by the government coalition four years ago, the property tax bill is “a great leap forward” says interior minister (LSAP). It was presented to the press almost exactly a year after prime minister (DP), on 12 October 2021, told MPs in his state of the nation address that he planned to “table a bill on the reform of property tax within the next 12 months”.
Indeed, in an interview with Delano in June 2021, Bettel had cited the example of a residence opposite his private home in Bonnevoie that has been empty for 25 years. “It has three apartments, but they [the owners] have no interest in renting them out. Have an annual tax that doubles, and people will soon understand we have a housing crisis caused by speculation.”
At the time, the prime minister said that a property tax bill would be a step in the right direction. “But if someone thinks we can wave a magic wand to solve the housing problem, they are mistaken.”
Tackling empty residences
The ministers announced the introduction of a compulsory national tax on the non-occupation of housing. It replaces the municipal tax on unoccupied accommodation introduced in 2008 which, the minister explained, did not yield the results expected by the government. A residence will be considered unoccupied if no person is registered in it for a period of six months. The municipality must then establish that the property is not occupied. The tax will be levied by the Luxembourg inland revenue and will amount to €3,000 per residence and will increase by €900 per year to a maximum of €7,500.
It is unacceptable that owners do not build housing on their land, even though it is intended for this purpose, while more and more people, young people, families, can no longer afford to live in Luxembourg
A property mobilisation tax will also be introduced. It is based on the establishment of a national register which lists all land available for construction under the general development plans. It will make a difference between land that is immediately available for construction and land that requires the completion of prior roadworks and public and collective infrastructures before it can be built upon.
“It is unacceptable that owners do not build housing on their land, even though it is intended for this purpose, while more and more people, young people, families, can no longer afford to live in Luxembourg,” said Bofferding.
National register to keep things ticking
The national register will aim to assign a unique identification number to all types of buildings and to each separate dwelling within each building. This will provide added value in many areas of administration for the benefit of citizens, scientific research and planning, states a press release from the ministries of interior, housing and finance.
“The aim is not to create an additional tax burden for citizens and companies, which in times of crisis and inflation would not be desirable,” said (DP).
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The bill also includes other reforms on property tax and the mobilisation of land and housing. It introduces a main residence tax reduction as a fixed amount for each taxpayer. The property tax will also remain a municipal tax. The government has set up allowing citizens to estimate the amount of property tax they’d have to pay under the planned reform.