Key takeaways: buying off-plan in Luxembourg is tightly regulated: a mandatory notarial contract, payments capped by law according to the building's progress (15% at foundations, 95% at completion, 5% that can be escrowed), a bank completion guarantee that cannot be waived, and 2-year and 10-year warranties after acceptance. On the tax side, the 7% duties apply only to the land, the 3% VAT applies to the construction, and the July 2026 package even plans to exempt the construction share, subject to the vote. Here is the complete guide to the VEFA.
VEFA or sale at term: two very different mechanisms
The sale of buildings to be constructed (Articles 1601-1 et seq. of the Civil Code, from the law of 28 December 1976) exists in two forms:
| Point | VEFA (future state of completion) | Sale at term |
|---|---|---|
| Ownership | The land immediately, the buildings as work progresses | At completion, with retroactive effect |
| Payment | Staged according to construction progress | At delivery (guarantee deposits escrowed) |
| Site control | The seller remains project owner until acceptance | Same |
In practice, almost all developer sales in Luxembourg are VEFA. For a home, this regime is mandatory as soon as payments are made before completion: no contractual structure can escape it.
The contract: notarial, complete, or void
The VEFA contract for a home must be in notarial form, and only after the building permits are obtained. On pain of nullity (which only the buyer can invoke), it must state: the identity of the landowner, the permits, the description of the property and its agreed degree of completion, the price and its terms, the delivery deadline, and the completion or repayment guarantee. The plans, the descriptive notice of materials and equipment and the co-ownership regulations must be annexed or handed over before signature.
Upstream, the reservation contract is also regulated: the deposit is capped at 2% of the provisional price, on a special account, and is fully refunded within a month if the project deviates (final price more than 5% higher, equipment removed, value reduced by more than 10%) or if the seller does not proceed. Any other "reservation" formula is void.
Staged payments: the legal schedule
This is the buyer's central protection: you only pay for what is built. Article 1601-9 caps the calls for funds imperatively:
| Stage of the works | Maximum payable |
|---|---|
| Before works begin | The price of the land and existing structures (land share in principle ≤ 10% of the total price) |
| Completion of foundations | 15% of the construction price |
| Slab by slab, up to the top slab | 50% maximum |
| Completion | 95% |
| Handover | 5% balance, which can be escrowed if conformity is contested |
Those final 5% are your acceptance lever: in case of contested conformity defects, you can escrow the balance instead of paying it. Demanding payments outside the schedule is criminally sanctioned.
The guarantees: before and after acceptance
Before acceptance, the completion guarantee must be given by a bank: either the bank guarantees the financing needed to complete the building, or it guarantees the repayment of your instalments if the project cannot be carried out. Any waiver of this guarantee is deemed unwritten: a developer who "does not need one" is a warning sign, not an argument. Combined with ownership acquired as work progresses and payment by instalments, it is what protects you if the developer fails.
After acceptance: apparent defects can be raised up to one month after taking possession; minor works are guaranteed for 2 years, and structural works for 10 years (Articles 1646-1, 1792 and 2270 of the Civil Code). These warranties follow the property: they also benefit successive owners, a genuine argument at resale.
VEFA taxation: the structural advantage
- Registration duties (7%): levied only on the value of the land and existing structures on the day of the deed, not on future construction.
- VAT: the construction is subject to VAT, with the super-reduced 3% rate for a main residence (benefit capped at €50,000 per home).
- Bëllegen Akt: up to €40,000 per buyer on the duties, with the occupation deadline extended to 4 years for a VEFA (instead of 2).
- Announced, not voted: the 16 July 2026 package plans to fully exempt the construction share from duties for main-residence VEFA purchases at most 80% completed, for 3 years, retroactive to 16 July. Details in this CARMO blog article: the 7 housing measures for 2026.
The traps to check before signing
- Is the price revisable? The mention is mandatory; index-linked revision mechanisms can inflate the final bill, and a significant overrun opens rights for the buyer. Have the worst-case scenario quantified.
- The delivery deadline and its sanctions: the deadline is a mandatory mention, but the law provides no automatic late-delivery penalties: they are contractual. Negotiate them before signing, not after.
- The descriptive notice: it is what fixes the quality (materials, equipment). What is not in it is not owed.
- The termination indemnity: capped by law at 10% of the price, borne by the defaulting party.
If you are buying, if you are selling
If you are buying
The VEFA is fiscally unbeatable for new-build, but it must always be compared with existing property: a price per m² 20 to 30% higher, construction delays, and financing costs during the works. The full comparison is in this CARMO blog article: new or existing in Luxembourg.
If you are selling
New-build VEFA is the direct competitor of your existing property, especially with aided first-time buyers. Your counter-arguments: a lower price per m², immediate availability and an established neighbourhood. A professional valuation positions your property precisely against the local new-build supply.
Frequently asked questions
When do you become the owner in a VEFA?
Immediately for the land, then of the buildings as they are executed. The seller nevertheless remains project owner until acceptance of the works.
How much do you pay when signing a VEFA?
At most the price of the land and existing structures. Then the calls for funds follow the legal schedule: 15% of the construction at foundations, 50% maximum at the top slab, 95% at completion, a 5% balance at handover.
What happens if the developer goes bankrupt?
Three protections combine: you already own the land and the executed works, you have only paid for actual progress, and the bank completion guarantee finances the end of the project or repays your instalments.
Can you refuse to pay the final 5%?
If conformity is contested, the 5% balance can be escrowed instead of paid: it is the buyer's legal lever at acceptance.
What registration duties are due on a VEFA?
The 7% applies only to the land and existing structures on the day of the deed; future construction is subject to VAT (3% for a main residence, benefit capped at €50,000). The Bëllegen Akt applies, with 4 years to occupy.
What to remember: Luxembourg's VEFA is one of the most protective regimes in Europe, provided you use its protections: the payment schedule, the bank guarantee, the descriptive notice, the escrowable 5%. Everything is decided when reading the contract and its annexes, before the notarial signature. That is exactly the kind of review we do with our buyers.
Request my free valuationRead: new or existing in Luxembourg
Sources and legal basis
- Law of 28 December 1976 on sales of buildings to be constructed (Legilux); Articles 1601-1 to 1601-14, 1642-1, 1646-1, 1792 and 2270 of the Civil Code
- Grand-Ducal regulation of 24 February 1977: bank completion or repayment guarantee (Legilux)
- Guichet.lu: acquiring a property to be built
- AED: 3% housing VAT; Guichet.lu: Bëllegen Akt (4-year deadline for VEFA)
- Gouvernement.lu: "Booster fir de Wunnengsbau" package (16 July 2026, announced measures, not yet voted)
By David Carmo, founder of CARMO Immobilier, has been a real estate professional since 2008. A former member of the board of directors and disciplinary council of the Chambre Immobilière du Grand-Duché de Luxembourg, he is today a founding member and board member of the Fédération des Agents Immobiliers (FAI) and a trainer at the Académie de l'Immobilier.
This article is for information purposes and does not constitute legal advice. Have any VEFA contract reviewed by your notary before signing.