Luxembourg’s housing market tax and legislative changes 2024
November 28, 2024
The Law of May 22, 2024, on Housing Market Recovery aims to revitalise Luxembourg’s real estate market, which has slowed due to rising interest rates and construction costs. It introduces tax and legislative measures set to take effect in 2024. Read the full article from OmniTrust here, or read the summary of its key provisions below.
Capital gains from real estate sales
Reduced taxation in 2024: From 1 January to 31 December 2024, capital gains on properties held for over two years will be taxed at 25% of the overall rate (maximum 10.5%) without affecting Employment Fund allowances.
Changes from 2025: From 1 January 2025, only properties held for over five years will qualify for long-term capital gains benefits. Property gains held for five years or less will be taxed under the short-term regime.
Rental income and exemptions
Starting 1 January 2024, organisations managing social rentals will receive a 90% exemption on rental income, up from 75% in 2023. Additionally, a 4% support allowance for construction costs is available for depreciation up to €250,000 on rental housing acquired in a future state of completion between 1 January and 31 December 2024.
Financing the main residence
From the year the rental value is calculated, interest deductions on debt for acquiring a primary residence are capped at €4,000 per person for the first five years, reduced to €3,000 for the next five years, and €2,000 thereafter.
New rental premium
Employers can grant a tax-exempt rental bonus to employees under 30, covering 25% of the bonus, up to the monthly rent (excluding charges) or €1,000, whichever is lower.
Tax credit on rental income
Investors can claim a tax credit of up to €20,000 on registration and transcription fees for rental property purchased via notarial deed between 1 January and 31 December 2024.
Relaunch of deferred capital gains
The regime allowing the deferral of long-term capital gains tax when reinvesting in a new building for social rental management is reactivated from 1 January 2024.
Exemptions for transfers to public entities and new beneficiaries
The exemption on capital gains from transfers of buildings to the State, municipalities, municipal unions, and now the Housing Fund, is expanded. These measures aim to boost the real estate market by making housing investment more attractive, supporting new housing construction, improving access for young people, and promoting social housing.
For more information on taking advantage of these new legislative provisions, contact OmniTrust here.
News
Eyad Farsakh
Kreston Global Corporate Finance Group and Managing Partner at Kreston Awni Farsakh & Co. United Arab Emirates
Senior Associate at Kreston Lentink Corporate Finance
Ward Rentenaar is a Senior Associate in Corporate Finance at Kreston Lentink in the Netherlands, where he has been an integral member of the firm for four years.
A successful deal starts with a clear understanding of its goals and stakeholder expectations. Answering questions like the rationale behind the transaction and what success looks like helps establish a solid framework.
Get the company sale-ready
In today’s volatile global landscape, preparing a business for sale is essential to reduce risks, enhance value, and streamline the M&A process. A well-prepared company has organised finances, stable working capital, legal clarity, and minimal reliance on key individuals or external parties. This preparation also helps identify and address potential risks early.
Leverage experience and expert advice
Drawing on past experiences helps refine strategies, avoid pitfalls, and improve due diligence and integration processes. With M&A being a complex and time-intensive endeavor, often taking 6–12 months, expert consultants are invaluable in guiding entrepreneurs through this emotionally charged, one-time process while they manage daily operations.
Secure early financing
Obtaining bank funding early accelerates the deal, builds trust with the seller, and prevents delays or uncertainties during closing.
Focus on details
Small but crucial tasks, like site visits and cultural evaluations, can offer insights beyond paperwork. Visiting a site before a non-binding offer (NBO) reveals operational strengths and culture, critical for aligning the target and acquirer. Poor post-acquisition integration risks losing value, so plan thoroughly to avoid it. Maintain a detailed to-do list with clear responsibilities and deadlines to ensure a smooth closing process.
Provide realistic forecasts
Overly optimistic projections can erode buyer confidence, lead to renegotiations, and jeopardize the deal if actual performance falls short.
Estimate synergies conservatively
Overestimating synergies can lead to overpaying and strain future cash flows. Conservative projections help mitigate risks and safeguard financial and reputational stability.
Perform comprehensive due diligence
Due diligence is key to uncovering hidden risks. Beyond financial and legal aspects, consider factors like IT systems and ESG practices to gain a full understanding of the target.
Carefully structure the deal
Deal structure significantly impacts tax, legal obligations, and the transfer of risks and benefits. The effective date is crucial, as it determines when ownership and liabilities shift. Options include:
Locked box mechanism: Based on a past financial statement, offering certainty and practicality.
Closing accounts: Reflecting the company’s actual financial position at closing but with greater complexity and uncertainty.
Balancing these factors minimizes risks for both buyer and seller.
Be clear and detailed in the LOI
The letter of intent (LOI) defines key terms, expectations, and conditions, not just the price. A thorough LOI sets a strong foundation for the deal, reduces misunderstandings, streamlines due diligence, and guides post-due diligence negotiations. It protects both parties by resolving potential ambiguities.
If you are interested in doing business with Kreston Global, contact us here.
News
Carmen Cojocaru
ESG Technical Director on the Kreston Global ESG Expert Network Committee
Jelena Mihic Munjic, Managing Director at Kreston MDM Serbia, is a licensed Certified Auditor, Accountant, and Registered Court Expert in economics and finance.
In a recent feature on women in accounting, Liza Robbins, Chief Executive of Kreston Global, Jelena MihićManaging Director at Kreston MDM Serbia, and Carmen Cojocaru, ESG Technical Director and Managing Partner at Kreston Romania, share their perspectives on gender diversity and inclusion in the accounting profession in an article for The Accountant.
Professional milestones for women in accounting, shaped by local, regulatory, and legislative changes, mirror broader societal progress towards gender equality. Zoya Malik, editor-in-chief of International Accounting Bulletin, speaks to accounting leaders about their career journeys, the advocacy of trailblazers, and global initiatives aimed at overcoming exclusionary practices and creating opportunities for future generations of female accountants. Insights are shared by Sarah Ghosh, immediate past president of the Chartered Institute of Management Accountants (CIMA); Asmâa Resmouki, president of the International Federation of Accountants (IFAC); Francesca Lagerberg, CEO of Baker Tilly International; Liza Robbins, CEO of Kreston Global; and Allee Bonnard, audit and assurance partner at Deloitte UK.
Pictured left to right: Liza Robbins, Jelena Mihić and Carmen Cojocaru
Liza Robbins: Gender bias
Reflecting on her career, Liza notes, “I entered the accounting industry 16 years ago, when I was appointed CEO of Morison Global. I was the second female CEO of an international group and 16 years on, I am one of four out of nearly 50 groups.” As a long-time advocate for gender diversity, Liza highlights the barriers women still face, including the challenge of balancing family and career, limited access to leadership roles, and persistent biases. “These issues can be overcome by creating more supportive and inclusive work environments, promoting flexible working conditions, and ensuring equity in advancement opportunities,” she adds.
Jelena Mihić: Resilience, adaptability, and support systems
Liza also references the experience of Jelena Mihić, Managing Director at Kreston MDM Serbia, whose career has been shaped by her roles as a woman, entrepreneur, and mother. Jelena’s approach to managing these responsibilities exemplifies resilience and adaptability. She has worked to promote a culture of shared responsibility within her firm, advocating for flexible work schedules, parental leave, and remote work options. “Her mantra is that there are no shortcuts to success: you do things properly, take the time to build a solid base, and the results will follow,” Liza observes.
On a broader scale, Liza notes that women are increasingly outpacing men in educational achievements, and businesses must adapt to attract diverse talent. “The use of remote and flexible work options, enabled by the advances of technology, support the employment of women who often need flexible working arrangements to juggle their non-work-related responsibilities,” Liza says. She stresses the importance of evolving business models that meet the needs of older women in the workforce, including phased retirement and executive coaching.
In her view, the accounting industry must position itself as a dynamic field that embraces new technologies and values empathetic leadership. “As people skills and emotional intelligence grow more important, women’s natural ability to build strong relationships will lead to greater success.”
Carmen Cojocaru: Advocating for women at all career stages
Carmen Cojocaru, ESG Technical Director and Managing Partner at Kreston Romania, also contributes to this conversation, highlighting the need for the industry to actively support women at all career stages. Carmen’s personal journey—from employee to entrepreneur while raising a family—underscores the importance of balancing work and life. In a country like post-revolution Romania, where women often had to prove themselves in ways others did not, Liza believes fostering a culture of diversity, inclusivity, and well-being will empower women to reach their full potential.
A collective vision for the future
The stories of these women collectively highlight the evolving role of women in accounting. The industry is increasingly recognising the need for flexible work environments, mentorship, and the promotion of gender diversity at all levels. However, the journey towards true equality requires continued efforts to break down barriers, both societal and structural.
As more women take on leadership roles, they not only bring fresh perspectives but also help pave the way for future generations of women in accounting. By continuing to promote inclusive practices, ensure equitable advancement opportunities, and provide robust support systems, the accounting industry can create a more diverse, dynamic, and successful future for all professionals.
To read more about Kreston Global’s UN Sustainability Goals, including gender equality, please visit our impact plan.
News
Non-residents in Belgium to declare taxes online by 22 November
Non-residents earning income from Belgian sources, such as salaries, pensions, or rent, are subject to Non-Resident Tax (NRT), calculated like personal income tax. This applies to individuals residing or headquartered abroad who are not registered with Belgium’s national register. Non-residents with Belgian income, whether living abroad or staying temporarily in Belgium for work or studies, must file a “non-resident tax declaration.”
Who needs to file the NRT?
The NRT applies to non-residents who receive income from Belgian sources and either reside abroad or stay in Belgium temporarily (for work, studies, or other purposes). If you fit this category, you must submit a non-resident tax declaration.
Legal cohabitants and married couples
For NRT purposes, legal cohabitants are treated as married persons. To be recognised as legal cohabitants, two individuals must file a declaration at their local municipal office, meeting the same legal criteria as those set by Belgian law. Foreign cohabitation agreements must also meet Belgian standards. Typically, married couples and legal cohabitants submit one joint declaration unless specific circumstances apply, such as the year of marriage, cohabitation declaration, divorce, separation, or the death of a partner. In cases where only one partner has NRT income, and the other partner has foreign or exempt income exceeding €12,550, separate declarations are required.
Children’s income and parental declarations
Parents with legal entitlement to their minor children’s property must include taxable income from such property in their declarations. In cases of joint entitlement, each parent must declare half of the taxable income. If one parent has sole entitlement, they must declare the entire income. However, child labour or child support income is reported in the children’s name, not the parents. Additionally, maintenance payments for non-resident children are excluded from the tax declaration.
What income is affected?
Non-residents must declare all income received from Belgian and foreign sources. Belgian income that is exempt from tax and foreign income is not subject to non-resident tax. For real estate, if you or your spouse own rental property in Belgium, you must declare all properties. Real estate income is based on the Net Cadastral Income (NCI) rather than actual rent. If the total NCI is below €2,500 per year for each spouse, no tax is due, but you must still file a declaration and indicate “nil” on the form.
Declaration process
Non-residents must submit their tax declaration online via MyMinfin by November 22, 2024. A joint declaration requires both spouses’ connections. Those without MyMinfin access can submit a simplified version using a Belgian national number, which doesn’t allow changes after submission. Once submitted, you will receive confirmation of whether tax is owed or a refund is due. Be sure to complete the preparatory document before filing the declaration.
For more information on doing business in Luxembourg, click here.
Juanita Cid is a seasoned accountancy professional with over 20 years of experience in audit, compliance, and technical accounting. As a partner at Lentink Accountants/Belastingadviseurs, Juanita combines deep technical expertise with leadership skills to deliver tailored financial solutions and ensure regulatory compliance for clients.
Audit regulations driving change in 2024
Audit regulations driving change in 2024 are in rapid transformation, caused by regulatory changes, technological advancements and client demands. Understanding these changes can help organisations prepare for the future and ensure compliance while maximising value from their audits. For more insights on the evolving audit landscape, read the original article by Juanita Cid in AB Magazine, or the summary below.
Rebuilding trust
Global regulatory frameworks are evolving in response to high-profile financial failures, such as the Enron collapse and the 2007–08 financial crisis. These events highlighted the need for greater transparency and accountability in corporate reporting. For mid-market firms, audits are now subject to stricter oversight and require adherence to more rigorous standards.
For businesses operating across borders, regulatory consistency is crucial. Governments and regulators are working to harmonise standards internationally, simplifying compliance for organisations with global operations. This alignment reduces complexity but also pressures companies to adapt their practices to meet new requirements.
The rise of ESG and integrated reporting
Environmental, social, and governance (ESG) reporting has become a key focus for regulators and stakeholders alike. Increasingly, companies are required to disclose their ESG impacts, with frameworks such as the EU’s Corporate Sustainability Reporting Directive (CSRD) setting new benchmarks for transparency.
Integrated reporting, which combines financial and non-financial data, is gaining momentum. For mid-market businesses, this represents an opportunity to demonstrate their long-term value and commitment to sustainability. However, compliance with these evolving standards will require investment in reporting capabilities and robust data collection processes.
New standards and the digital imperative
The introduction of standards like ISSA 5000, designed to enhance the reliability of sustainability reporting, demands significant adaptation from auditors. Mid-market companies may need to collaborate more closely with audit firms to ensure their methodologies align with these new requirements.
In addition, digital transformation is critical. Advanced technologies such as artificial intelligence and data analytics are revolutionising the audit process, enabling firms to provide deeper insights and more accurate assessments. For businesses, this shift can lead to more efficient audits that deliver greater strategic value. Investing in digital tools and aligning with forward-thinking audit partners will be key to navigating this new landscape.
Talent and workplace culture
The audit profession is grappling with a talent shortage, a challenge exacerbated by rising workloads and heightened expectations. For mid-market businesses, this could impact the availability and cost of quality audit services. To mitigate this, firms are focusing on creating engaging workplace cultures, offering professional development, and promoting work-life balance to attract top talent.
Embracing change
For mid-market organisations, these challenges also represent opportunities. Collaborating with audit firms that are committed to innovation and adapting to regulatory changes can provide businesses with a competitive advantage. By staying ahead of the curve, companies can ensure compliance, enhance their reputation, and build stronger relationships with stakeholders.
The future of audit is dynamic and complex, but it is also rich with potential for those willing to embrace change.
If you would like to speak to one of our experts about your next audit, please get in touch.
News
Kreston Reeves supports Fortuna Ltd with business acquisition deal
November 5, 2024
Kreston Global member firm Kreston Reeves supported Fortuna Ltd in its business acquisition of Holyhead Towing Company Ltd, a strategic move that bolsters Fortuna’s offerings and expands its market reach.
Fortuna Ltd, based in Stanley, Falkland Islands, is a market leader in the sustainable seafood industry. The acquisition of Holyhead Towing diversifies Fortuna’s portfolio and extends its reach into new service areas.
Holyhead Towing Company Ltd, located on the Isle of Anglesey in North Wales, has deep-rooted connections to the Falkland Islands and operates a fleet of 15 vessels. These vessels support energy, marine civil engineering, dredging, and renewable energy projects across Europe, Africa, the Arabian Gulf, and the Indian Ocean.
The transaction advisory services provided by Kreston Reeves were led by Corporate Finance Director Craig Dallender, and supported by a comprehensive team including Partner Tom Wacher, Corporate Tax Senior Manager Mohammed Mujtaba, and Corporate Finance Manager Sakshi Gupta. Kreston ITH and Breaking the Mould Accounting Limited contributed international tax support, while Pinsent Masons provided legal advice.
Craig Dallender said, “We are proud to have supported Fortuna Ltd through our transaction advisory services for this significant acquisition. The successful completion showcases the extensive expertise at Kreston Reeves and our ability to navigate complex, cross-border transactions.”
James Wallace, Managing Director of Fortuna Ltd, noted, “This acquisition is a major milestone for Fortuna. It strengthens our capabilities and offers new opportunities for growth. We thank Kreston Reeves and Pinsent Masons for their invaluable assistance throughout the process.”
James Burns, Managing Director of Holyhead Towing Company Ltd, added, “This marks an exciting new chapter for our company, allowing us to invest in our future with a focus on safety, quality, and innovation. We extend our gratitude to all involved for their support.”
If you would like Kreston Global to support you with transaction advisory services, please get in touch.
News
Kreston Global welcomes new Italian firm the the network
Established in 2001, Revicom has 7 audit partners and 12 members of staff and is based in Milan.
It provides Audit and Assurance services to national and international privately owned entrepreneurial businesses across Italy and internationally, as the firm has a large number of international subsidiaries as clients. Revicom deals with a variety of industries, including technology, renewable energy, retail, and the entertainment industry.
The addition of Revicom to Kreston Global’s network ensures a strengthening of accounting provision across its substantial European region. The region consists of 62 member firms across 33 countries, providing a range of financial, audit and accounting, taxation, and other advisory services to large and mid-sized businesses requiring inbound and outbound growth support and set-up.
Liza Robbins, Chief Executive of Kreston Global, said:
“I am delighted to welcome Revicom to the Kreston Global network and to be able to augment our Italian offering as it is such an important European location for clients in the network. Revicom brings considerable international client experience and will be a valuable addition to our European portfolio of firms.
Marco Moroni, Managing Partner at Revicom said:
We chose Kreston Global because of its ethics and great reputation in assisting international companies around the world. All of the founding partners, including myself, were trained in a ‘Big 4’ accounting organisation; we appreciate that the Kreston network is made up of like-minded people. We are confident that this collaboration with the excellent member firms around the world will be a key factor in our growth and that of the network as a whole.
If you are interested in joining the Kreston Global network, contact us here.
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