Luxembourg: Overview

RENTAL YIELDS

Last Updated: Mar 18, 2009

Highest yield for Luxembourg apartment at 5.23%

Luxembourg City apartment sale prices average around €5,000 per sq. m., with apartments of 120 sq. m being the most expensive, at €5,400 per sq. m.

Gross rental yields on apartments in Luxembourg City average 4.49%, with 40 square metre (sq. m.) apartments generating the highest gross rental yields, at 5.23%.

For house-buyers, Moselle is slightly more expensive than Oesling, with a 150 sq.m. house in the former costing around €412,000, versus around €338,000 in Moselle. This represents a sale price of around €2,698 per sq. m. in Moselle, versus €2,255 per sq. m. in Oesling.

For rents of houses in Moselle and Oesling, there is not enough data to give either rentals, or yields.

Read Rental Yields  »

TAXES AND COSTS

Last Updated: Jul 21, 2008

High taxes despite tax-haven reputation

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	7.02%	10.1%	14.2%
Click here to see a worked example
Source: Disclaimer

Rental Income: Rental income is taxed at progressive income tax rates ranging from 8% for net annual income above €10,335, to 38% on income above €36,570.

Capital Gains: If the property is held for more than two years, capital gains tax rates are reduced to a maximum of 19.475%.

Inheritance: Inheritance tax is payable only if the property is obtained from a non-resident, at rates between 2% and 15%.

Residents: Residents of Luxembourg are taxed on their worldwide income.

Read Taxes and Costs  »

BUYING GUIDE

Last Updated: Apr 02, 2007

Buying costs are moderate in Luxembourg

Total roundtrip transaction cost, i.e., the cost of buying and selling, is between 11.15% and 15.65% inclusive of registration fees (6% - 10.2%) and estate agent's commission (3% plus 15% VAT).

Read Buying Guide  »

LANDLORD AND TENANT

Last Updated: Jun 29, 2006

Luxembourg has strong tenant protection laws

Luxemourg's rental market is strongly pro-tenant.

Rent: Rent control limits the amount of returns a landlord can receive. Rent can only be increased every three years.

Tenant Security: If evicted, the tenant is usually awarded generous compensation and more than sufficient time to look for an alternative dwelling.

Read Landlord and Tenant  »

ECONOMIC GROWTH

Last Updated: Sep 21, 2009

Economic recession in the Grand Duchy

The Grand Duchy of Luxembourg is known as the “Green Heart of Europe” because of its location and natural resources. Covered with large woods, it has a beautiful landscape. About the size of Paris Metropolitan Area, it is completely surrounded by Belgium, Germany and France.

Notwithstanding its small size, Luxembourg has played a key role in the formation of numerous organizations - the European Union, NATO, OECD, the United Nations, Benelux, and the Western European Union. The Grand Duchy joined the euro currency area in 1999.

Luxembourg is the seat of EUROSTAT, European Court of Justice, European Court of Auditors, the European Investment Bank and other vital EU organs.

From average GDP growth of 5.2% from 1999 to 2007, the Grand Duchy entered recession in the last quarter of 2008 with GDP falling by 3.6% q-o-q after a 0.6% q-o-q contraction in Q3 2008. The economic downturn continued in Q1 2009, with GDP contracting 1.5% from the previous quarter. GDP is expected to contract 4% in 2009.

Economic recovery is expected in mid-2010 with 1% GDP growth.

Unemployment rose to 5.4% to 12,512 in June 2009, up from an average of 2.3% in 2001.