Property tax: your new flat is taxed as if it were 1941

This is no figure of speech. Luxembourg’s property tax rests on the unitary value, a base derived from the German Bewertungsgesetz (Valuation Act) of 1934, set at 1941 conditions and never reassessed since.

While the price per square metre has gone into orbit, the tax base has stayed frozen in the middle of the Second World War.

1941: a base frozen in time

Luxembourg’s property tax (Grondsteier) starts from the unitary value of the property. That value was determined under the rules of the Bewertungsgesetz of 16 October 1934, at the conditions prevailing on 1 January 1941, and has never been reassessed since.

In practice, for a new building, the tax authorities reconstruct the rent it could have earned in 1941. That amount serves as the base, multiplied by an assessment rate and then by the municipal rate set by each municipality.

The result bears no relation to market reality. In Luxembourg, a building worth several million euros can stay below €300 a year in property tax. At that price, a parking space often costs more per month than the tax does per year.

The comparison: €60 versus €850

Per head of population, French property tax weighs around fourteen times more than its Luxembourg cousin.

In France, an individual owner paid an average of €1,117 in property tax (taxe foncière) on buildings in 2025, €35 more than a year earlier. In Luxembourg, no equivalent statistic is published, which already says a great deal about how much the subject weighs in municipal finances.

Sources: Chamber of Deputies, 17 July 2025, for Luxembourg; DGFiP (French tax authority) data reported by Tout sur mes finances for France.

Two fossilised bases, two opposite outcomes

Both systems rest on cadastral bases of comparable vintage: 1941 on one side, 1970 on the other. The gap therefore comes not from the age of the base, but from what is done with it.

In France, the 1970 rental values are uprated every year in line with inflation: +7.1% in 2023, +3.9% in 2024, +1.7% in 2025. Municipalities then vote their rates and, since the abolition of the residence tax (taxe d’habitation), the taxe foncière has become one of their last remaining tax levers.

In Luxembourg, the unitary value is neither indexed nor uprated, and the municipal rates applied remain moderate. The same fossilised method, but with a rate that also seems to date from 1941.

The reform: bill 8082A, still in committee

The reform exists, on paper. Bill 8082, tabled in October 2022, was split in July 2025: 8082A covers property tax (IFON) and the new land mobilisation tax (IMOB), while 8082B deals separately with the tax on unoccupied housing (INOL).

The new model abandons the unitary value in favour of a base value for each plot, calculated from four criteria:

• the building potential under the general development plan (PAG);
• the distance from Luxembourg City;
• the surface area of the plot;
• the services available in the locality.

One detail matters: the buildings themselves are not taken into account. It is the land and its potential that will be taxed, not the building that stands on it. Each municipality will be free to set its own rate.

As for the timetable, the government is aiming for entry into force in 2028, a test year in 2029, and a first real tax year in 2030. At the time of writing, the text has not yet been voted on in plenary session.

Above all, according to the Minister for Home Affairs, the total yield of the tax should remain stable after the reform, at around €35–40m. Modernise, yes. Catch up with France, no.

Sources: Chamber of Deputies, presentation of 17 July 2025; government amendment 8082A/02.

What this means for owners

For an owner-occupier or an investor, in older or new-build property alike, property tax remains a marginal line in the budget today. The reform will change the distribution from one municipality to another and from one plot to another, but not the overall order of magnitude.

The real change concerns holders of building land left undeveloped: the IMOB is designed precisely to make their waiting more expensive. For them, planning ahead starts now.

For everyone else, Luxembourg is decidedly not a country where property comes cheap. It is expensive to buy, and that is a one-off. Given the price per square metre here, one can at least hope that this particular advantage survives the reform.