Since 1 January 2021, certain corporate Luxembourg investment funds (i.e. Part II UCI, SIF and RAIF, as defined below) that hold real estate assets located in Luxembourg are subject to a special taxation, the so-called real estate levy.

The legislation that establishes the new real estate levy also imposes a new tax reporting obligation that requires not only the funds that actually hold Luxembourg real estate to file a report, but also requires any Luxembourg funds (i.e. Part II UCI, SIF and RAIF) in corporate form to file a report. The tax reporting obligation applies to all such entities from calendar years 2020 and 2021.

This report must be filed by 31 May 2022. Failure to report by this deadline means entities could be subject to a EUR 10,000 fine. The report is to be filed using the MyGuichet platform.

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Corporate investment funds in scope of the real estate levy

This reporting obligation applies to Luxembourg investment vehicles subject to one of the following investment fund regimes (Investment Fund Regimes):

• undertaking for collective investment (UCI) subject to part II of the law of 17 December 2010 related to undertaking for collective investment (Part II UCI);
• specialised investment funds (SIF) subject to the law of 13 February 2007 related to SIFs; or
• reserved alternative investment funds (RAIF) subject to article 1 of the law of 23 July 2016 related to RAIFs.

The underlying special purpose vehicles held by an investment fund and not subject to one of these Investment Fund Regimes are not subject to this reporting obligation, nor are they subject to the real estate levy.

The reporting only applies to vehicles taking one of the following corporate forms:

• private limited company / société à responsabilité limitée (S.à r.l.);
• corporate partnership limited by shares / société en commandite par actions (S.C.A.);
• public limited company – société anonyme (S.A.); or
• simplified public limited company / société par actions simplifiée (S.A.S.).

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Specific reporting obligation for all corporate investment funds other than UCITS

The specific real estate levy reporting obligation applies to the following investment vehicles:

• all Luxembourg funds in corporate form established under one of the Investment Fund Regimes, which must file a report if they held Luxembourg real estate assets, either directly or through a tax transparent vehicle (partnership or mutual fund (fonds commun de placement - FCP), at any time during calendar years 2020 or 2021. The reporting must be done regardless of whether they have held Luxembourg real estate assets - directly or indirectly; and
• all funds established under one of the Investment Fund Regimes that changed their legal form from a corporate form to a tax transparent form (partnership or mutual fund - FCP) during calendar years 2020 or 2021 and that held a Luxembourg real estate asset at the time they made that change.

In addition, Luxembourg investment funds holding Luxembourg real estate assets must also report their taxable real estate revenues by 31 May 2022, and pay any relevant tax by 10 June 2022.

It is important to note that this real estate levy reporting and taxation regime does not apply to vehicles that are unregulated, such as an alternative investment fund, whether taking a corporate form or taking the form of a partnership, that do not adopt one of the Investment Fund Regimes (i.e. are not a Part II UCI, SIF or a RAIF).

The details of the real estate levy tax obligations have been expanded on in a circular issued by the Luxembourg direct tax authorities (Administration des contributions directes) on 20 January 2022 (Circular PRE_IMM n° 1 dated 20 January 2022).¹

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Footnotes

1) The Circular (available in French only) is accessible here.