Buying property in Luxembourg through a company: advantages and points to watch

There is no universal answer. In your own name, management is simple and the capital gain on resale benefits from the regime for individuals. Through a company, joint ownership and transfer are made easier, but the tax treatment of rent and capital gains differs. The trade off should be costed according to your situation before the purchase.

Not systematically. The advantage depends on the use of the property, the holding period, the volume of rent and the profile of the shareholders. The company bears IRC, municipal business tax and net wealth tax, whereas the individual follows the income tax scale. The trade off should be costed before the purchase.

Often a civil real estate company for family or rental holding with a civil purpose, a SARL where the activity is more marked or where liability is to be limited, and sometimes a SOPARFI for group structuring. The choice depends on the project and must be validated by a lawyer.

It is a company with a civil purpose intended to hold, manage and let buildings, without any commercial activity of buying and reselling. It offers great flexibility in the articles to allocate shares and organise transfer, but the shareholders are liable for debts in proportion to their shares, unlike in a SARL.

The civil company has a civil purpose and extended shareholder liability; the SARL limits liability to contributions and suits a more marked activity. The civil company favours holding and transfer, the SARL isolation of risk. The choice weighs liability, activity and management obligations.

The SOPARFI acts mainly as a group head holding real estate subsidiaries, not as the simple owner of a building. The tax treatment of a building held directly differs from that of a participation. It is not a shortcut to exempt real estate, but a structuring tool to be handled with advice.

Rent forms part of the company's taxable profit, subject to corporate income tax and municipal business tax. The company deducts its expenses and loan interest and takes depreciation, but also bears net wealth tax on its net value.

Through a company subject to corporate tax, the capital gain on disposal forms part of ordinary taxable profit, without the favourable regime for individuals. Selling the shares of a real estate company is not the same for tax purposes as selling the building itself. The exit scenario should be anticipated from the purchase.

Yes. The acquisition of a building located in Luxembourg gives rise to registration and transcription duties, whether the buyer is an individual or a company. Buying through a company does not remove these duties. Some housing-related allowances do not apply in the same way as for individuals.

Yes. What is transferred is shares, which can be divided and given in tranches, rather than an indivisible building. The owner can keep management, give shares gradually and organise the split between heirs without breaking up the property, relying on the articles and a shareholders' agreement.

As soon as there is more than one shareholder, it is strongly recommended. The agreement organises exits, deadlocks, additional contributions and the management of the property. It prevents the conflicts that are common with jointly held real estate, which can block a resale or complicate a sale of shares.

The company borrows, which can isolate the debt from the shareholders' personal assets. Banks often require guarantees or sureties from the shareholders, however, especially for a recent structure. The deductibility of interest follows the company's own rules.

It is possible but rarely optimal. In your own name, the sale of the main residence is in principle exempt from capital gains tax and certain housing-related benefits apply. Through a company, these favourable regimes do not work in the same way. The trade off should be costed case by case.

Yes, there is no nationality or residence requirement for the shareholders. The treatment of income and capital gains also depends, however, on tax residence and the treaties that apply. Scoping the position beforehand avoids double taxation and secures the resale.

Incorporation and running costs, accounting and filing obligations, a tax treatment of capital gains that is often less favourable than in your own name, net wealth tax at company level, and a risk of deadlock in the event of disagreement if the exit is not organised. A poorly conceived structure can block a resale.

It is not a legal requirement, but the support of a corporate lawyer secures the choice of form, the drafting of the articles and the agreement, and the tax trade off between direct ownership and ownership through a company. These choices are lasting and hard to correct after signing.