Airbnb in Luxembourg: what hosts need to know about taxes

Renting your place on Airbnb in Luxembourg isn't tax-free. Find out what income to declare, the risks if you don't, and what you can deduct.

Renting out your place on Airbnb can seem like an easy way to earn a bit of extra cash. But heads up: in Luxembourg, income from Airbnb isn't tax-free. You need to declare it properly, or risk getting caught out by the tax authorities. So what are the rules?

1. Airbnb income: what do you need to declare?

As soon as you receive rental income through Airbnb (or any similar platform), it counts as rental income and must be included in your tax return.

• It's not exempt.
• All amounts must be declared, even if you only rent out occasionally.

Example: you rent a room in your home for a few weekends a year and earn €2,000, that amount needs to go in your tax return.

2. Rental income or business income?

How it's taxed depends on how often you rent out your property:

• Occasional rental (less than 90 days/year): treated as rental income.
• Regular rental (more than 90 days/year): considered a commercial activity, with heavier tax and social security obligations.

3. What can you deduct?

Good news: you can deduct certain costs related to the rental, such as:

• maintenance and repair costs,
• a share of utilities (heating, water, electricity, internet),
• mortgage interest if the property is financed with a loan.

These deductions reduce your taxable income.

4. What about VAT?

Generally, residential rentals are VAT-exempt in Luxembourg. However, if your rental activity looks more like a business, you could be liable for VAT.

5. Cross-border workers and Airbnb in Luxembourg

If you're a Luxembourg resident, you declare this income in Luxembourg.

If you're a cross-border worker renting out a property located in Luxembourg, the income is also taxable in Luxembourg (where the property is).

6. What happens if you forget to declare?

Failing to declare your Airbnb income can lead to:

• a tax adjustment,
• late payment interest,
• fines.

Better to get ahead of it and declare properly.

Bottom line

Renting on Airbnb in Luxembourg is allowed, but it comes with clear tax obligations. Before you start, make sure you understand the difference between casual renting and running a business, and keep all your receipts to back up your deductions.

Tip: Run a simulation on taxx.lu to see how your Airbnb income affects your taxes, or talk to a tax adviser to avoid any nasty surprises.