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Finances and credit

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.

Last time updated
29.03.24

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.

Tax calculation formula

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
Assessment rate
Communal rate
Example

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
AmountPayment datesPayable amount
Under 55 euros15th of NovemberWhole amount
55-110 euros15th of May and 15th of NovHalf of the total amount
More than 110 euros15th of February, May, August and NovemberA 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.

faq

Frequently Asked Questions (FAQ)

Who is obliged to pay property tax?

Is there any way to exempt a company from paying tax?

My business does not fall into these categories. What can I do?

We took photos from these sources: Nastuh Abootalebi on Unsplash

Authors: Aleksandr
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