Renting out your property for short periods of time: what you need to know

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September 19, 2022

In 2021, Luxembourg recorded 756,387 arrivals of non-resident tourists and 10,667 new residents, not counting the other professionals who need to live there for more or less short periods. These are all people looking for accommodation for short periods and, in this situation, property owners may be tempted to rent out their house or flat on an occasional basis for short periods ... but what do you need to know?

Can you rent out your property for short periods of time?

As the owner, you can rent out your property for short periods of time. Indeed, in Luxembourg, there is currently no law governing the rental of real estate for short periods, whether you are an individual or a company.
However, certain rules which must be followed:

If you rent out furnished accommodation, you must declare this to the municipality
You must comply with certain public health requirements

All these requirements can be consulted on the Luxembourg government’s information website.

However, given the growing importance of this kind of activity, the Minister of Tourism has introduced a project of law to regulate the seasonal rental of real estate. This law is intended to limit your ability to rent out your property to a maximum cumulative period of three months starting from the date of your last rental. For periods in excess of three months, the owner of the temporarily rented property must apply for a permit to provide accommodation.

If you rent your accommodation, you must ask your landlord for permission to sublet it, and the rent you charge for subletting may not exceed the rent you pay.

What is the tax treatment for income from renting out furnished property?

An owner who rents out furnished property must file a tax return in respect of this income, whether or not he is tax-resident and he will be subject to tax on this income.

Also, the rent is not subject to VAT if the total of this annual revenue does not exceed €30,000. Property owners must declare the revenue, whatever it is, and apply for a VAT number.

As regards this tax on accommodation, every owner who rents out a property on an occasional basis must find out, from the municipality where the accommodation is located, whether or not it imposes such a tax.

What insurance covers my short-term rented property?

As a home owner, it is safer to take out home insurance on your property. This insurance will cover the property during the rental period.

You may also want to ensure that your tenants have third party insurance which will cover any damage they may cause to your property.

In order to take all the necessary measures and if you use a short-term rental platform, find out what are the general conditions applied by the platform and what recourse you have in the event of a claim. For example, Airbnb has set up damage and third party cover for its renters. If you have any doubts, you can always enquire about its scope and exclusions when you take it out.

If you are considering renting out your property, make sure you do your research and meet all the conditions set out in the legislation. This will ensure that you have a smooth and successful renting experience.