The registration fee is an indirect tax which is levied at the time of incorporation of a company and in certain cases during the existence of said company.
It can be a fixed or proportional fee, depending on the acts to which it relates.
Companies become subject to a registration fee for the following operations:
- creation and modification of the company's constitutional documents;
- purchase of business premises;
- leasing of business premises.
Creation or modification of the constitutional documents
Business operations concerned
A fixed specific registration fee is levied on operations such as:
- incorporation of a civil or commercial company who has its registered office or central administration in Luxembourg;
- modification of the articles of association of a civil or commercial company who has its registered office or central administration in Luxembourg;
- transfer to Luxembourg of the registered office or central administration of a civil or commercial company.
The amount of the fixed specific registration fee is set at EUR 75 and must be paid to the Land Registration and Estates Department (Administration de l'Enregistrement et des Domaines - AED).
The specific fixed registration fee becomes payable from the date of registration of the notarised deed and it must be paid within the deadlines set forth by law:
- 10 days for notarial acts where the notary is established in the same commune as the registration office;
- 15 days for notarial acts where the notary is established in a different commune;
- 3 months for notarial acts drawn up abroad.
Purchase or leasing of business premises
Companies have the possibility to build, purchase, rent or lease their business premises.
Construction of a building
The act of construction itself is exempt from registration fees. It is subject to VAT only.
Purchase of a building
When the company decides to purchase an existing building, the registration fee is 7 % of the building's purchase price:
- 6 % registration fees;
- + 1 % transcription fees.
An additional fee (communal surcharge) of 3 % of the purchase price is applied to business premises located in Luxembourg city.
The registration fees form part of the purchase cost of the property and will be depreciated over its useful economic life.
The fees are collected by the notary when the deed is signed and transferred to the Land Registration and Estates Department.
Rental of a building
If the company chooses to rent its premises, the cumulated sum of rental payments as foreseen in the rental agreement (lease) is subject to:
- either a registration fee of 0.6 %;
- or a fixed fee of EUR 12 if the lease is subject to VAT.
These fees must be paid when the lease is registered with the Land Registration and Estates Department. The registration must be completed within 3 months in the case of a private lease agreement, on pain of a fine equal to the amount of the fee.
Leasing transactions are operations where a lessor rents out one or more existing buildings to a lessee, provided:
- the lessor is an accredited professional or a company incorporated by such professionals whose business purpose is to finance specific buildings through property leasing (leasing is a regulated activity);
- the lessee has to use the building for business purposes;
- the leasing contract:
- is concluded for a fixed amount of time whose duration depends on the depreciation period of the leased property;
- must include a clause waiving the VAT exemption which allows the company to exercise its right to opt for VAT;
- at the term of the contract, the lessee can choose to:
- return the building;
- renew the leasing contract under new conditions to be set at the time of the renewal;
- purchase the building under the conditions laid down in the leasing contract.
If all the conditions are met, the leasing contract is not subject to proportional registration fees at the time of its conclusion. It is only subject to a fixed fee of EUR 12.
When the contract expires:
- the return of the property or the renewal of the contract is not subject to registration fees;
- the purchase of the building is subject to the payment of registration fees. These are based on representative payments carried out during the lease term and at the time of the sale. However, the registration fees are based on the sales value if said value is higher than the purchase price.