Since 1 January 2021, certain Luxembourg corporate investment funds (i.e. Part II UCIs, SIFs and RAIFs, as defined below) that hold real estate assets located in Luxembourg are subject to a special tax, known as real estate levy.
The legislation establishing the new property levy also imposes a new tax reporting requirement which not only requires funds that actually hold Luxembourg property to file a return, but also requires any Luxembourg fund (i.e. Part II OPC, SIF and RAIF) in company form to file a report. The tax reporting obligation applies to all these entities from calendar years 2020 and 2021.
This report must be filed by May 31, 2022. Failure to report within this timeframe could result in entities being fined EUR 10,000. The report must be filed via the MyGuichet platform.
Company mutual funds affected by the property tax
This reporting obligation applies to Luxembourg investment vehicles subject to one of the following investment fund regimes (Investment fund regimes):
- undertaking for collective investment (OPC) subject to Part II of the law of 17 December 2010 relating to undertakings for collective investment (Part II OPC);
- specialized investment funds (FIS) subject to the law of 13 February 2007 relating to SIFs; or
- reserved alternative investment funds (RAIF) subject to article 1 of the law of 23 July 2016 relating to FIAR.
The underlying securitization vehicles held by an investment fund and not subject to one of these investment fund regimes are not subject to this reporting obligation, nor to property tax.
The declaration only applies to vehicles taking one of the following corporate forms:
- limited liability company / limited liability company (S.à rl);
- partnership Limited by shares / partnership Limited by shares (SCA);
- anonimous society – anonimous society (HER); or
- simplified public limited company / joint stock company (SAS).
Specific reporting obligation for all company mutual funds other than UCITS
The obligation to declare the specific property tax applies to the following investment vehicles:
- all Luxembourg funds in corporate form established under one of the investment fund regimes, which must file a declaration if they held Luxembourg real estate assets, either directly or through a fiscally transparent vehicle (partnership or mutual fund (mutual fund – FCP), at any time during the calendar years 2020 or 2021. The declaration must be made regardless of whether they have held Luxembourg immovable property – directly or indirectly; and
- all funds incorporated under one of the Investment Fund Regimes which have changed their legal form from a corporate form to a fiscally transparent form (partnership or mutual fund – FCP) during the calendar years 2020 or 2021 and who held Luxembourg property at the time they made this change.
In addition, Luxembourg investment funds holding Luxembourg real estate assets must also declare their taxable real estate income before May 31, 2022 and pay any relevant tax before June 10, 2022.
It is important to note that this property tax reporting and taxation regime does not apply to unregulated vehicles, such as an alternative investment fund, whether in the form of a corporation or under the form of a partnership, who are not adopting one of the Investment Fund Regimes (i.e. they are not a Part II UCI, SIF or RAIF ).
The details of the tax obligations in terms of real estate levy have been developed in a circular issued by the Luxembourg authorities for direct contributions (Direct tax) January 20, 2022 (PRE_IMM Circular No. 1 of January 20, 2022).1
1) The Circular (available in French only) can be accessed here.