How to Get the 3% Super-Reduced VAT for Building or Renovating Your Home in Luxembourg

If you are building or renovating a home in Luxembourg, you can pay 3% VAT instead of the 17% standard rate on eligible works — provided the dwelling is your principal (main) residence. This is the "TVA logement" scheme, also called the super-reduced rate (taux super-réduit). On a large project, the saving runs into tens of thousands of euros.

What the 3% rate covers

The super-reduced rate applies to the creation/construction and the renovation of a dwelling, as long as that dwelling is used for purposes of main residence — either by the owner directly, or, for a renovated dwelling, by a tenant. Eligible works are the construction services and materials that go into the building, from the structural shell through to the finishing stage: foundations, walls, roof, windows, heating, electrical and sanitary installations, and finishing materials.

Some items are excluded and stay at the standard rate — notably fitted kitchens, air-conditioning, and home-automation systems. Pure design, legal or financial services tied to the project are also outside the scheme.

The cap: €50,000 per dwelling

The total tax advantage is capped at €50,000 of VAT benefit per dwelling, whether built and/or renovated, over the lifetime of the property. The cap is the same regardless of household income. In practice, €50,000 of VAT advantage corresponds to a large volume of eligible works — roughly several hundred thousand euros of work — so most single projects stay below it. A bill once proposed raising the ceiling to €100,000, but that increase was not adopted: the cap remains €50,000 in 2026. Always confirm the current figure on the official sources linked below.

The principal-residence condition

The benefit is conditional on the dwelling being assigned to main-residence use for at least two years. This minimum occupation period generally begins on 1 January of the year following completion of the eligible works. If you sell, rent out, or change the use of the home before that period is met, the AED can reclaim part of the advantage. A secondary or holiday home does not qualify.

Two ways to claim: direct application or reimbursement

There are two mechanisms, both administered by the Administration de l'enregistrement, des domaines et de la TVA (AED):

• Direct application (application directe): the contractor invoices you at 3% from the start. This requires prior AED approval (agrément) for the project before the works are billed.
• Reimbursement (remboursement): you pay 17% VAT on the invoices, then apply to the AED to get back the 14-point difference between the standard and super-reduced rates.

Both routes lead to the same net 3% outcome up to the cap; the choice is mainly about cash flow. Direct application avoids fronting the higher VAT, but needs the approval in place before billing.

How to apply, step by step

1. Confirm eligibility: the dwelling must be (or become) your principal residence, and the works must be eligible construction/renovation services.
2. Choose your mechanism: decide between direct application (contractor bills at 3%) or reimbursement (claim the difference back).
3. For direct application: the professional submits an approval request to the AED before starting work, countersigned by you (the client), with company details and a description of the project. The contractor then files quarterly statements of the invoices issued under the scheme.
4. For reimbursement: after the works, submit your claim to the AED — online via MyGuichet.lu or by post — with the paid invoices. The total works must exceed €3,000 excluding VAT, and each invoice submitted must exceed €1,250.
5. Mind the deadline: a reimbursement claim must be filed at the latest 5 years after 31 December of the calendar year to which the VAT relates.
6. Keep your documents: retain invoices, proof of payment, and proof that the dwelling is your main residence, in case of a check.

Not the same as the Bëllegen Akt

Don't confuse the 3% VAT scheme with the Bëllegen Akt. The Bëllegen Akt is a registration-duty (droits d'enregistrement) tax credit applied when you buy a property and sign the notarial deed — currently €40,000 per buyer (€80,000 for a jointly taxed couple). The TVA logement scheme, by contrast, reduces the VAT on building or renovation works. They are separate measures with separate rules, and you can potentially benefit from both on the same home.

For the precise legal text, eligible-works lists and the latest forms, consult the official sources: Guichet.lu, the AED's indirect-tax portal pfi.public.lu, and the Ministry of Housing logement.public.lu.

Last reviewed: June 2026. The rate, cap and conditions change — check the official sources linked above for the latest.