Xavier Bettel (DP) and his government majority have kept their word. On 12 October 2021, the head of state 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". After being adopted by cabinet on Wednesday 5 October, the project will be presented to the press on Friday 7 October. This is the fulfilment of an ambition set out more than four years ago in the government coalition agreement.
Levied by the municipalities and applied to "all built or unbuilt properties of legal and natural persons, regardless of their ability to pay, the use made of these properties or the means of financing used to acquire them", this property tax is considered to be a key element in the fight against the housing crisis affecting Luxembourg.
What we know about this reform
- This bill is divided into two parts: on the one hand, a revised version of what is now simply called the "property tax" and, on the other, a new tax on land speculation, called the "land mobilisation tax" (for undeveloped land).
- The revised version of the property tax concerns the formula for calculating it. From now on, it will be a simple multiplication between a unit value representing the building potential of a plot of land (and no longer an evaluation dating from 1941 as was the case) and a tax rate set by the municipality in which the land is located.
- A deduction will be provided for those who own their main residence.
- The land mobilisation tax is supposed to be based on the same calculation method as the property tax, but it will be progressive and will increase sharply in order to push uncooperative owners to make use of their land.
- The property tax and the new tax on speculation could be combined, with the latter tax being added to the property tax for land that is buildable but not built on. The period of time after which the speculation tax takes effect still needs to be determined, according to Taina Bofferding.
- The revenues generated by the property tax will remain for the benefit of the municipalities. However, until now uncertainty remained regarding the tax on speculation. The state argued that it should be paid to the state, which caused a lot of disgruntlement at Syvicol, the union of towns and municipalities.
- This property tax bill is accompanied by the creation of a national register of buildings and housing listing empty land and unoccupied accommodation. This will make it possible to implement the tax on speculation. A tax on non-occupation accommodation will also be introduced this Friday.
This story was first published in French on Paperjam. It has been translated and edited for Delano.