The essentials. In Luxembourg, short-term furnished letting becomes a commercial activity from 90 cumulative nights per year: an establishment authorisation, declarations and VAT follow. On paper it can earn more, but its real yield is eroded by vacancy, costs and a tourism market that is 85% foreign, as the 3.8% drop in nights in the first quarter of 2026 reminds us. In the southern basin, long-term letting remains the safer choice, with a gross yield of around 4.5 to 4.7% in Esch according to the Housing Observatory.
Why a tourism figure speaks to an investor
In early 2026, European tourism is picking up again: 471.1 million nights in the Union in the first quarter, 3.4% more than a year earlier (Eurostat). Luxembourg, however, fell by 3.8%. A modest gap, but against the European trend.
The detail that matters to a landlord: 85.1% of nights in the Grand Duchy come from foreign visitors, the third highest share in Europe after Malta and Cyprus. In other words, Luxembourg tourism depends almost entirely on flows that no one controls. When those flows weaken for a quarter, that means unsold nights.
This is precisely the risk of a short-term rental investment: your income tracks occupancy. Long-term letting, by contrast, rests on a resident tenant, under a lease, who pays whatever the weather. So this tourism figure is not an anecdote: it illustrates what separates two investment strategies.
Short-term rental in Luxembourg: what the law actually says
Many picture Airbnb as passive income. In Luxembourg, the framework is stricter than it looks.
The 90-night threshold. Renting a furnished home to tourists stays incidental as long as you remain under 90 cumulative nights per year, about three months. Beyond that, the activity counts as commercial accommodation and requires an establishment authorisation, which itself assumes a HoReCa qualification (training recognised by the House of Training).
The declarations. Every tourist host must create a guest record form for each traveller aged 15 and over and send it to STATEC, an obligation reinforced by the law that took effect in September 2025. The property must also be declared to the municipality.
VAT. Tourist accommodation falls under the super-reduced 3% rate. Depending on your revenue and residence status, you may fall within the scope of VAT; an exemption threshold exists, to be checked for your situation.
The conclusion is simple: beyond very occasional use, short-term rental in Luxembourg is not a dormant investment, it is a small business, with its obligations and its costs.
Unsure of the strategy for a property? A fair valuation, and a view on its rental potential, are the right starting point. Request yours, free of charge and with no commitment.
Long-term rental: the real yield, especially in the south
This is where the official figures overturn many assumptions. In its analysis report no. 13 (February 2025), the Housing Observatory measures the gross rental yield of an apartment bought and then let long-term.
That average gross yield held between 4.26% and 4.56% from 2010 to 2018, before falling to 3.04% in 2022 under the surge in prices, then climbing back to 3.74% in 2023 thanks to the price correction and still-firm rents.
The south stands out. In Esch-sur-Alzette, the Observatory records 2023 gross yields of 4.58% for a new one-bedroom apartment and 4.72% for an older one, against 3.0 to 3.7% in Luxembourg City. The south therefore earns markedly more than the capital, for a vacancy risk that stays low.
Our view from the ground. In the southern basin (Esch, Petange, Differdange), we see apartments at around 5,500 EUR/sq.m. to buy and steady long-term rental demand, driven by cross-border workers and Belval employees. A 65 sq.m. one-bedroom bought for about 360,000 EUR and let for close to 1,350 EUR a month comes out around 4.5% gross, consistent with the Observatory's figures. An indicative figure, always to be refined property by property.
Tax, often underestimated. On purchase, the investor pays 7% registration and transcription duties, without the Bëllegen Akt in most cases (a specific tax credit of 20,000 EUR per person has existed since 2024 for off-plan purchases intended for letting). Rents are taxed as income, with deductible costs: capped loan interest, management fees, land tax, maintenance. On resale after two years, the capital gain is capped at half the global rate, i.e. 21% at most, with an allowance of 50,000 EUR per person, 100,000 EUR for a couple.
Short-term or long-term: the comparison
| Criterion | Short-term rental | Long-term rental |
|---|---|---|
| Legal framework | Commercial accommodation from 90 nights/year: establishment authorisation + HoReCa qualification | Standard lease, no specific authorisation |
| Declarations | Guest record forms to STATEC, declaration to the municipality | Registered lease, no guest form |
| Taxation | 3% VAT possible, commercial-revenue logic | Rents taxed as income, deductible costs |
| Indicative gross yield | Potentially higher, but very variable | About 4.5 to 4.7% in the south (Observatory 2023) |
| Vacancy and risk | High: track tourist occupancy (-3.8% in early 2026) | Low: tenant under a lease |
| Management | Intensive: cleaning, check-in, calendar, linen | Light: one stable tenant |
| Suitable area | Tourist areas (capital, Vianden, Moselle) | Everywhere, especially the southern jobs basin |
Cross-border buyers and expatriates: do not transpose the French reflex. In France, the 2024 Le Meur law now requires registration with the town hall for furnished tourist rentals, caps a main residence at 120 days (sometimes 90 depending on the municipality) and has reduced the LMNP tax advantage since 2025. Luxembourg has no LMNP regime: rents are taxed as ordinary income, but the tax on holding and on capital gains remains among the gentlest in the region. A setup that is profitable on the French side may therefore be less relevant on the Luxembourg side, and vice versa. Details to check for your municipality and your situation.
If you buy to let, if you already own
If you buy to let in the south, long-term letting of well-located, properly energy-rated existing stock offers the best risk/return balance: a gross yield above the capital and low vacancy. Aim for location quality, near the station, Belval, cross-border routes, rather than a tourist gamble. On that note, browse our properties for sale in the south.
If you already own a short-term rental that is ticking over slowly, do the real net calculation: vacancy, costs, time spent, obligations. Switching to long-term, or selling to reinvest, can free up capital and time. The early-2026 tourism dip is a good moment to revisit the question. A costed valuation settles the debate quickly.
FAQ: short-term or long-term in Luxembourg
Can you run an Airbnb freely in Luxembourg?
As long as you stay under 90 cumulative nights per year, the rental stays incidental. Beyond that, it becomes a commercial accommodation activity, which requires an establishment authorisation, a HoReCa qualification, guest record forms sent to STATEC and a declaration to the municipality.
What rental yield should you target in Luxembourg in 2026?
According to the Housing Observatory, the average gross yield of an apartment let long-term was 3.74% in 2023. The south does better: around 4.58% for a new one-bedroom and 4.72% for an older one in Esch-sur-Alzette, against 3.0 to 3.7% in Luxembourg City.
Does short-term letting really earn more?
On paper, the revenue per night is higher. But the real net yield is cut by vacancy, costs, management and legal obligations. In a low-tourism area like the south, long-term letting is usually more profitable and far simpler.
How are rents taxed in Luxembourg?
Long-term rents are taxed as income, with deductible costs (capped interest, management fees, land tax, maintenance). On purchase, expect 7% duties. On resale after two years, the capital gain is capped at half the global rate, i.e. 21% at most, with an allowance.
Cross-border buyer: what differs from France?
France regulates furnished tourist letting through the Le Meur law (town-hall registration, a 120-day cap for a main residence, a reduced LMNP advantage since 2025). Luxembourg has no LMNP regime, but its holding and capital-gains tax stays gentler. Do not transpose a French setup without rechecking it.
My short-term rental underperforms: sell or switch?
Start with an honest net calculation, then compare it with a long-term scenario and a sell-to-reinvest scenario. A costed valuation of the property informs the decision in minutes.
The takeaway. The right question is not "which earns more on paper", but "which net yield matches your area and your risk tolerance". In the south, the answer leans clearly towards long-term. Before you buy, switch or sell, start from a reliable figure, and see our other market analyses.
Thinking of selling or repositioning an investment? A fair valuation is the starting point. Request yours, free of charge and with no commitment.
Official sources
- Eurostat, tourism statistics Q1 2026: ec.europa.eu/eurostat
- Letting a furnished property short-term, Guichet.lu: guichet.public.lu
- Operating an accommodation establishment, Guichet.lu: guichet.public.lu
- Guest record forms, Guichet.lu: guichet.public.lu
- Rental investment yield, Housing Observatory (analysis report no. 13): logement.public.lu
- Rents by municipality, Housing Observatory: logement.public.lu
By David Carmo, founder of CARMO Immobilier. A real estate professional since 2008, board member of the Chamber of Real Estate of the Grand Duchy of Luxembourg and of its disciplinary council, and trainer at the Real Estate Academy.
This article is for information only and does not constitute legal advice. Regulations change and every situation is specific. Before any decision, check the rules in force and consult your notary or an adviser.