On 18 July 2023, a draft law introducing the concept of secondary residence into Luxembourg tax law and suggesting that certain tax benefits applicable to principal residences be extended to secondary residences (the “Draft Law”) has been submitted to the Luxembourg Parliament (Chambre des Députés).
According to the Draft Law, a secondary residence should be defined as a building which, alongside a natural person's principal residence, is used for residential purposes, without being occupied on a continuous basis.
The Draft Law foresees an extension of the property tax (impôt foncier) and non-occupancy tax benefits applicable to principal residences to secondary residences.
The Draft Law is part of a wider reform of Luxembourg property tax and the introduction of a non-occupancy tax (draft law No. 8082 submitted on 10 October 2022). As it stands, the planned reform provides for a EUR 2,000 allowance for property tax purposes and a complete exemption from non-occupancy tax for the principal residence. The Draft Law proposes to extend these benefits to secondary residences.
It should however be noted that the Draft Law explicitly states that, as far as direct taxation is concerned, the exemption for principal residences will not apply to secondary residences.
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