3% VAT for Renovation in Luxembourg 2026: conditions, eligible works and procedures
In Luxembourg, the standard VAT rate is 17%. For construction and renovation works on a dwelling used as a main residence, the State grants a super-reduced rate of 3% — a saving of 14 percentage points on every eligible invoice. The tax benefit is capped at €50,000 per dwelling and two procedures exist: direct application (the tradesman invoices at 3% after AEDT approval) or an after-the-fact refund. This page details the precise eligibility conditions, the official list of covered and excluded works, both procedures step by step, pitfalls to avoid and concrete calculations to maximise your saving.
Principle: how does 3% VAT work in Luxembourg?
The 3% super-reduced VAT rate on renovation and construction of residential property in Luxembourg was established by the Grand-Ducal Regulation of 30 July 2002, as amended. Since 1 January 2024, the standard VAT rate has been 17%. On a €60,000 excl. VAT invoice, the difference between 17% (€10,200) and 3% (€1,800) represents a €8,400 saving. For a €100,000 project where €50,000 is eligible, the saving reaches €7,000.
The competent authority is the Administration de l’Enregistrement, des Domaines et de la TVA (AEDT), Tax Office XII, 308, route d’Esch, L-1471 Luxembourg.
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Eligibility conditions for 3% VAT 2026
Three cumulative conditions must be met: (1) the property must be a dwelling (a distinct unit capable of use as a main residence, including cellar and garage accessories); (2) it must be used as a main residence — directly by the owner or indirectly by a tenant (renovation only); (3) for renovation works, the building must have been completed at least 10 years ago (date of original building permit, not purchase date). Each invoice must individually exceed €1,250 excl. VAT, and for direct application the attached quote must exceed €3,000 excl. VAT. The dwelling must remain a main residence for 2 years after completion — any change must be declared to the AEDT within one month or the full benefit must be repaid with statutory interest.
For new construction, conversion of offices to residential use, or extensions, the 3% rate applies without an age condition, provided the owner will use the property as their own main residence.
Works eligible for 3% VAT — complete official list
| Work category | Official detail | VAT |
|---|---|---|
| Shell works | Earthworks, foundations, masonry, concrete, timber frame, roofing | 3% |
| Facades | Rendering, external insulation (ITE), plaster coatings | 3% |
| Interior thermal insulation | Wall, roof space and floor insulation — materials and labour | 3% |
| Doors and windows | Windows, front doors, conservatories, shutters (including electric, installed simultaneously) | 3% |
| Sanitary fittings | Bath, shower, WC, urinal, washbasin, kitchen sink — excluding furniture, mirrors and accessories | 3% |
| Heating and ventilation | Central heating, boiler, heat pump, radiators, underfloor heating, mechanical ventilation, solar thermal collectors | 3% |
| Electrical installation | General wiring, consumer unit, cable installation — excluding specialist systems (alarm, home automation, IT network…) | 3% |
| Plumbing | Pipework, water connections, waste pipes, fixed kitchen plumbing | 3% |
| Floor and wall coverings | Tiling, parquet, carpet, paint, interior render — materials and installation by tradesman | 3% |
| Eligible interior joinery | Staircases, banisters, interior doors, window sills | 3% |
| Heating stoves | Wood and pellet stoves | 3% |
| Access route | Direct access path to dwelling and garage | 3% |
| Drainage | Septic tank, connection to public sewer network | 3% |
Works and expenses excluded from 3% VAT
| Excluded item | Official AEDT clarification |
|---|---|
| Furniture | Fitted kitchens, wardrobes, beds, tables, chairs — exception: heating stoves are eligible |
| Bathroom furniture and accessories | Vanity units, mirrors, soap holders, toilet roll holders, hooks, all sanitary accessories |
| Ineligible interior joinery | Built-in wardrobes, panelling — excluding staircases, banisters, interior doors and window sills |
| Blinds and sun protection | Interior blinds, curtains, external awnings — exception: window shutters (including electric with motor installed simultaneously) |
| Specialist technical systems | Alarm systems, home automation (EIB), IT networks, home cinema, photovoltaic panels, satellite and pay-TV |
| Wellness and pool equipment | Sauna, steam room, jacuzzi, whirlpool, swimming pool |
| Landscaping | Garden, planting, landscaping, secondary paths, fences — exception: direct access route to dwelling and garage |
| Professional fees | Architect, interior designer, structural engineer, notary fees |
| Materials purchased directly by owner | Not eligible for VAT refund |
| Invoices below €1,250 excl. VAT | Each invoice must individually exceed this threshold |
The €50,000 cap: how to calculate and manage it?
The total tax benefit cannot exceed €50,000 per dwelling, cumulative over the dwelling’s lifetime. For the benefit to reach exactly €50,000, eligible works must amount to €357,143 excl. VAT. In practice, most Luxembourg renovation projects stay well below this cap — a full renovation of a 150 m² house at €120,000 with 80% eligible (€96,000) yields a real saving of €13,440.
The refund right lapses after 5 years from 31 December of the relevant tax year. If renovating in multiple phases, you can accumulate requests up to the €50,000 cap.
Procedure 1 — Direct application: the tradesman invoices at 3%
Direct application is the most convenient procedure: you pay 3% VAT directly to the tradesman. It requires an administrative step before works begin.
Get a detailed quote
The tradesman prepares a quote excl. VAT over €3,000, distinguishing eligible (3% VAT) from ineligible items (17% VAT).
Prepare the approval request
The tradesman prepares the AEDT form with company data, client and property details, brief works description and the attached quote. Must be signed by both tradesman and owner.
Submit to the AEDT
Online via MyGuichet.lu (recommended) or by post to Tax Office XII – Approval Service, 308, route d’Esch, L-1471 Luxembourg — Tel.: (+352) 247-80707.
Wait for approval — no work before then
Complete applications are processed in approximately 10 working days. Without approval, the tradesman must invoice at 17%. Invoicing at 3% without authorisation exposes both parties to penalties.
Works and invoicing
Once approved, the tradesman issues invoices at 3% for eligible items. Ineligible items remain at 17%. Keep all original invoices.
Procedure 2 — After-the-fact refund from the AEDT
If works were invoiced at 17% (no prior approval, or project started without application), you can claim a refund of the VAT difference — recovering 14% of the eligible invoice amounts excl. VAT. Send the file to Tax Office XII – Refund Service, P.O. Box 31, L-2010 Luxembourg (tel.: (+352) 247-80708).
Required documents: official AEDT refund form (ref. MF_ED_DRTVA_F_202309_1), invoice schedule, original invoices bearing the tradesman’s Luxembourg VAT number, bank payment evidence, and a signed declaration of use as main residence.
Refunds for invoices from companies outside Luxembourg are only possible if those companies hold a Luxembourg VAT number and invoiced at 17% Luxembourg VAT. A Belgian or French VAT invoice is not refundable by the AEDT.
The refund right lapses after 5 years from 31 December of the relevant tax year.
Concrete calculations: how much do you save with 3% VAT?
Example 1 — Bathroom renovation (€25,000 excl. VAT)
| Item | Excl. VAT | 3% VAT eligible? | VAT paid |
|---|---|---|---|
| Demolition and removal | €1,800 | ✅ Yes | €54 |
| Plumbing | €4,500 | ✅ Yes | €135 |
| Sanitary fittings (bath, shower, WC, washbasin) | €5,200 | ✅ Yes | €156 |
| Floor and wall tiling (supply & install) | €6,000 | ✅ Yes | €180 |
| Electrical | €2,000 | ✅ Yes | €60 |
| Vanity unit + mirror + accessories | €2,500 | ❌ No | €425 |
| VMC installation | €1,500 | ✅ Yes | €45 |
| Ceiling painting | €1,500 | ✅ Yes | €45 |
| Saving vs 17% VAT | €3,010 | ||
Example 2 — Full renovation of 100 m² house (€85,000 excl. VAT)
| Item | Excl. VAT | Eligible? | VAT at 3% |
|---|---|---|---|
| Roof + timber frame | €22,000 | ✅ Yes | €660 |
| Thermal insulation | €12,000 | ✅ Yes | €360 |
| Windows + shutters | €14,000 | ✅ Yes | €420 |
| Full electrical | €8,000 | ✅ Yes | €240 |
| Plumbing + sanitary | €9,000 | ✅ Yes | €270 |
| Heating (heat pump + underfloor) | €12,000 | ✅ Yes | €360 |
| Floor coverings + painting | €6,000 | ✅ Yes | €180 |
| Fitted kitchen (furniture) | €8,000 | ❌ No | €1,360 |
| Architect fees | €6,000 | ❌ No | €1,020 |
| Total saving vs 17% VAT | €11,620 | ||
Combining 3% VAT with other renovation grants
The 3% super-reduced VAT is perfectly stackable with all other renovation support schemes in Luxembourg: Klimabonus Wunnen (direct energy grant), Enoprimes (energy supplier incentives), municipal grants, social top-up, and Klimaprêt subsidised loan — all cumulate without restriction. Combined example for a full energy renovation (windows + insulation + heat pump) at €60,000 excl. VAT: 3% VAT saving ~€7,000 + Klimabonus up to €12,000 + Enoprimes up to €3,000 + municipal grants = up to €24,000 in total savings.
6 mistakes to avoid with 3% VAT in Luxembourg
Starting works before AEDT approval
The most costly mistake. Without prior approval, the tradesman must invoice at 17%. Golden rule: no work before AEDT approval.
Not checking the building’s age
Eligibility requires a building completed at least 10 years ago. Verify the original building permit date — not your purchase date — with your municipality.
Buying materials yourself and handing them to the tradesman
Materials you purchase independently remain at 17% VAT. Let the tradesman source and supply all materials in their invoice.
Mixing eligible and ineligible items without clear breakdown
The AEDT will return any application that doesn’t explicitly separate 3% VAT items from 17% items.
Using a foreign tradesman without a Luxembourg VAT number
For the refund procedure, VAT is only recoverable if the tradesman holds a Luxembourg VAT number and invoiced at 17% Luxembourg VAT. Always verify the LU VAT number before signing.
Changing the dwelling’s use within 2 years of completion
Selling or converting to seasonal rental within 2 years requires full repayment of the tax benefit with statutory interest. Declare any change to the AEDT within one month.
Your tradesman handles the 3% VAT process for you
Renov.lu partner tradesmen are fully familiar with 3% VAT procedures: they prepare the approval request and guide you through each step.
Frequently asked questions about 3% VAT in Luxembourg
Does 3% VAT apply to a second home?
Not in general. The tax benefit is reserved for dwellings used as a main residence. However, if you rent your property to a tenant who uses it as their main residence, you can benefit from the reduced rate for renovation works (indirect allocation).
Can I benefit from 3% VAT if I do the works myself?
No. The procedure only applies to works carried out by a professional tradesman with a Luxembourg establishment licence. Self-purchased materials for self-installation are not eligible.
How long after works can I still claim a refund?
The refund right lapses after 5 years from 31 December of the relevant tax year. Invoices from 2026-4 can still be submitted to the AEDT up to 31 December 2026 at the latest.
Are solar photovoltaic panels eligible for 3% VAT?
No. PV panels are classified as specialist technical equipment and are explicitly excluded. However, solar thermal collectors (for hot water) are eligible for 3% VAT.
I already received part of the tax benefit 5 years ago. Can I apply again?
Yes, within the overall cap of €50,000 per dwelling. If you received €15,000 previously, you have €35,000 remaining available for future projects.
Are architect fees eligible for 3% VAT?
No. Architect, interior designer, structural engineer and notary fees are explicitly excluded by the Grand-Ducal Regulation of 30 July 2002. They remain subject to 17% VAT.
What if my tradesman forgot to apply for approval before works started?
You can still recover the difference via the after-the-fact refund procedure, within the 5-year limitation period. Collect original invoices and payment evidence and submit to Tax Office XII – Refund Service.
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