Today, the director of the Luxembourg indirect tax administration (administration de l'enregistrement et des domaines

As explained in our newsletter regarding the 2017 Luxembourg Tax Reform, the "usage theory" was applicable in the past to private deeds (e.g., debt claims) too. Such usage resulted in some cases in a 0.24% ad valorem registration duty when the private deed was referred to (i.e., "used") in a public deed, or used in front of courts. Indeed, such duty was due as the usage of the private deed triggered the obligation to register this deed, even if the deed in itself was legally not subject to any registration obligation. This has now been changed under the 2017 Luxembourg Tax Reform as regards to these deeds. Indeed, for deeds not required to be registered by their form or nature, the usage may henceforth be made for such deeds by means of a mere reference without the requirement of any registration.

The Circular clarifies in this respect that the usage regarding private deeds triggering a registration obligation has generally been abolished under the 2017 Luxembourg Tax Reform and that as a consequence, private deeds dealing for instance with debt claims and referred to in public deeds do not need to be registered any longer. However, it specifies that the "usage theory" continues to apply to deeds that must legally be registered within a certain deadline (délai de rigueur). In addition, the Circular specifies that any deed (including thus private deeds) must be registered if the deed is attached (annexé) to a deed subject to a registration obligation (e.g., public deed) or lodged with a notary's records (déposé au rang des minutes d'un notaire), in which cases a registration duty will still be triggered.

Finally, one should recall that a voluntary registration of a deed, including private deeds, will continue to trigger registration duties. As regards to the abolishment to register lease agreements within a certain deadline, as further described in our newsletter regarding the 2017 Luxembourg Tax Reform, the Circular specifies that the registration duties that have become due after the expiry of the applicable three-months deadline but before the entry into force of the law dealing with the 2017 Luxembourg Tax Reform remain due and outstanding. As a consequence, lease agreements concluded prior to 1 October 2016 need still to be registered. In contrast, any lease agreement that would have to be registered, based on the former rules, after the 1 January 2017 will not be subject, according to the retroactive principle in melius in criminal matters, to the double registration fine.