en
How to pay property tax for business
A step-by-step guide to paying property tax for companies based in Luxembourg. Let's take a look at how the tax is calculated and on which dates it must be paid.
Taxes are one of the most complex and stressful topics not only for individuals, but also for companies. Correct implementation of all procedures can guarantee peace of mind and stable work.
In fact, it is quite simple. Property tax must be paid by absolutely all individuals and legal entities if they own built or unfinished property.
This is not taken into account while levying the tax:
- Contributive capacity.
- The use that is made of these properties
- The means of financing used to acquire them (own money or loans).
Property that is under active construction is exempt from tax.
First of all, it is worth keeping in mind that taxable property is divided into two categories:
- Category A — agricultural and forestry facilities.
- Category B — other properties.
In turn, category B is divided into 6 more subcategories:
В1
Commercial Buildings
В2
Mixed-use buildings
В3
Buildings for other purposes
В4
Single-family and multi-family dwellings
В5
Undeveloped real estate, except for plots of land for residential development
B6
Plots for residential development
Exempt from tax
- Government and utility property used to provide public services.
- Property owned by charitable organisations.
- Buildings owned by hospitals and religious orders when used for medical purposes, worship, religious education or administrative purposes.
- Engineering structures, railway tracks and roads, and administrative property owned by KLL.
Property tax is levied by the municipality, so the municipality plays no small role in the final amount.
Property tax = tax base x communal rate. Where «tax base» = unit value x assessment rate.
Thus, the final formula can be expressed as follows:
Let's look at each of these variables in more detail.
Unit value
This parameter depends on the classification of the building, which is given at the beginning of this step. The value is calculated from the estimated rental income on 1 January 1941, then indexed to modern prices.
The result is reported to both the taxpayer and the municipality in which the building is located.
Assessment rate
This indicator is determined by law and takes into account both the location of the property and its purpose.
Communal rate
The communal rate is approved by the board of the municipality for each year. It is also taken into account when calculating the rate:
- Building Address.
- Facility Category.
Rates can be obtained directly from the commune or from the official Memorial B magazine.
Suppose a property has a cadastral income of €10,000 and the municipality in which it is located has set a property tax rate of 5%.
The tax is paid up to 4 times a year. It all depends on the total amount of tax.
Calculation
| Amount | Payment dates | Payable amount |
| Under 55 euros | 15th of November | Whole amount |
| 55-110 euros | 15th of May and 15th of Nov | Half of the total amount |
| More than 110 euros | 15th of February, May, August and November | A quarter of the total amount |
A letter from the tax office will arrive in the mail when the tax year follows the year in which the property was purchased or the building was completed. That is, if the building was built or purchased in November 2024, the tax assessment for it will be received after 31 March 2025 with the start of the new tax year.
Companies may deduct the amount of tax from their profits
This only works if the taxable property is part of the invested net assets of the company.
This can be useful in order to reduce the overall tax base for corporation tax.
Frequently Asked Questions (FAQ)
Who is obliged to pay property tax?
This tax is obligatory for all individuals and legal entities without exception if they own completed or unfinished real estate.
Is there any way to exempt a company from paying tax?
Charitable organisations, hospitals and religious organisations do not pay property tax, as well as owners if their property is used to provide social services.
My business does not fall into these categories. What can I do?
A company may deduct tax from income if the taxable property forms part of its invested net assets.
Send feedback
Source: guichet.public.lu
We took photos from these sources: Nastuh Abootalebi on Unsplash
Authors: Aleksandr
Was this article helpful?
Very helpful!
Informative!
I didn’t get it.
This is outdated.Share with
Copy link