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.
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):
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:
Specific reporting obligation for all corporate investment funds other than UCITS
The specific real estate levy reporting obligation applies to the following investment vehicles:
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
For more information on the real estate levy or any items referenced in this alert, please contact any of the authors or your usual Dechert contact.
Endnotes:
1) The Circular (available in French only) is accessible here.
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