Who lodges the application
A counterintuitive and often misunderstood point. Approval is applied for before the works begin, not after.
It is not the owner who lodges the application, but the professional carrying out the works.
The taxable person submits the request for direct application of the super-reduced rate to the competent administration for approval.
The owner countersigns, their declaration of use forming part of the file.
Practical consequence: an owner who says nothing to their contractor may find the step never taken, each assuming the other is handling it.
| Step | What it produces | Timing |
|---|---|---|
| Assembling the file | The documents required | Before the works |
| Filing the application | Registration | Before the works |
| Processing | Examination of the file | Before the works |
| Decision | Approval or refusal | Before the first invoice |
| Application of the rate | Invoicing at the reduced rate | After approval |
The five steps
They all take place before any work starts on site. The steps condition application of the reduced rate.
The detailed quotation. The professional prepares a quotation distinguishing items eligible for the reduced rate from those at the standard rate.
Assembling the application. It contains the details of the firm, the client and the building, a description of the works and the quotation as an annex.
The signatures. The application is signed by the professional and countersigned by the owner.
Lodging with the competent administration, before works begin.
The approval decision, authorising direct application.
Luxembourg professional sources indicate a processing time in the order of ten working days for complete applications, without that period constituting a commitment.
The contents of the file
Five items, whose absence delays or blocks. They make up the application file.
Identification of the firm carrying out the works.
Identification of the owner and the dwelling concerned.
A description of the works envisaged, precise enough to allow eligibility to be assessed.
The quotation exclusive of tax, with the items distinguished.
The declaration that the dwelling is used as a main residence, covered in the article on main residence.
The administration may request additional documents, which extends the time accordingly.
What the decision contains
Two elements to read carefully.
Authorisation to apply the reduced rate directly to the works described in the application.
The maximum amount of tax capable of benefiting from the reduced rate, having regard to the ceiling applying to the dwelling.
The approval covers the works described. Additional works decided during the project are not covered by an earlier decision, and call for a fresh application.
This point is the commonest cause of unwelcome surprise at the end of a project, extensions of scope being common.
The errors that cost most
Five errors, in decreasing order of gravity. They compromise the benefit of the reduced rate.
Starting works before approval, which closes the direct route and sends you to the repayment procedure.
Asking the firm to invoice at the reduced rate without approval, which exposes it and is not an option.
Failing to cover additional works by a supplementary application.
Overlooking the ceiling balance available, covered in the article on the ceiling and its exhaustion.
Letting the restitution period lapse where the repayment route is used, that right being subject to a limitation period.
The case of off-plan purchase
A particular situation worth knowing.
Where the dwelling is bought off plan, the developer invoices at the reduced rate on the part corresponding to the dwelling, after obtaining approval.
The purchaser must therefore make sure the step has been taken, rather than assume it is in hand.
The question arises before signing the deed, which links it to the timetable covered in the article on the timeline of applications.
What this means for a professional
Four rules.
Start the application on acceptance of the quotation, not at the start on site.
Distinguish the items in the quotation, a condition of admissibility and of clarity.
Lodge a supplementary application for any additional works, rather than assuming cover.
Confirm in writing to the client that works must not begin before the decision, and keep that record.
This article reflects a method of professional orientation. It does not replace tax advice or consultation of the competent administration.