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3% VAT on your home: up to €50,000 the state lets you claim back
Building or renovating your main residence? The super-reduced 3% VAT rate can save you up to €50,000 on the works. Here's how it all works.
VAT in Luxembourg is 17%. On your home, it can drop to 3%. That's not a typo, it's a tax break.
When you build or renovate your main residence, the state applies a "super-reduced" VAT rate of 3% instead of the standard rate. The point is simple: to encourage people to build and renovate. Your place, in this case.
Yes, a tax procedure that hands money back to you. It exists. Here's how it works.
Two ways to get it
There are two routes to the 3%. One direct, one a bit longer.
1. Direct application. The tradesmen invoice you at 3% straight away. For that, the firm has to get approval from the Registration Duties, Estates and VAT Authority (AED) before the work starts. No approval before the job, no 3% up front.
2. The refund. Already paid at the standard rate? You ask the AED to refund the difference between 17% and 3%. A bit more paperwork, same result in the end.
What counts, and what doesn't
The principle: anything that goes into the closed shell and basic finishing of a main-residence home.
Eligible works include:
- construction, extension and conversion into housing
- structure, façades, roofing, screeds and staircases
- floor, wall and ceiling coverings, and painting
- water, electricity, heating and ventilation systems
- connection to public networks
Not eligible:
- furniture and fitted kitchens
- special technical equipment (alarms, home automation, IT)
- air conditioning and "wellness" fittings
- interior blinds and curtains
- notary, architect and consulting-engineer fees
How much you can claim back
The tax advantage is capped at €50,000 per home built or renovated. That's a ceiling over the whole life of the home, not per project.
Example
On €60,000 of eligible works excluding VAT: at the standard 17% rate, the VAT would be €10,200. At the super-reduced 3% rate, it drops to €1,800. You save €8,400, which is the 14-point gap. Still well short of the €50,000 ceiling.
How to apply
If you didn't get the reduced rate directly, you claim the refund from the AED. Three conditions to meet:
- a total above €3,000 excluding VAT
- each invoice above €1,250 excluding VAT
- a period of at least 6 months covered
You apply online from your private MyGuichet.lu space, or by post with the form. You attach the invoices, the originals, proof of payment, and a statement confirming the home will be your main residence.
One detail that matters: the right to a refund lapses 5 years after 31 December of the calendar year concerned. After that, the money stays with the state.
The trade-off: two years at home
Watch out
To keep the advantage, the home has to stay your main residence for 2 years. The clock starts on 1 January of the year after the works are finished, not the day you drop off your moving boxes. Change how you use it before then and you repay the full advantage, with statutory interest. And any change of use has to be reported to the AED within a month.
In short
- 3% VAT instead of 17% on your main residence
- two routes: direct application (approval before works) or refund
- a €50,000 cap per home
- a duty to live there for 2 years, or pay it all back
The housing VAT scheme is handled by the AED, via MyGuichet.lu. We look after the other end.
taxx perk
The interest on your loan for your main residence, on the other hand, goes on your income tax return. And that's exactly our thing.
