By a law dated June 29th 2016, the Luxembourg parliament implemented the first of the announced new tax measures (for more information on several other announced measures, please refer to our April 2016 newsletter): capital gains realised during the period from July 1st 2016 until December 31st 2017 by an individual taxpayer upon disposal of immovable property will be taxed at a quarter (instead of half) of the taxpayer’s global tax rate.
The new temporary reduced tax rate does not apply to speculative gains, i.e. capital gains realised upon disposal within two years as from the acquisition of the immovable property.
The new tax incentive has been introduced in order to increase housing market dynamics and encourage the disposal of developed and undeveloped real estate.
It should be noted that the new measure does not apply to real estate held by individual taxpayers in their enterprise (business assets).