The motion--tabled by the CSV, the leftist Déi Lénk party and the Pirates--urged the government to reform rules on specialised investment funds (SIFs) that hold real estate assets. The funds are currently only subject to a subscription tax of 0.01% of their net assets.

Opposition lawmakers said high net-worth individuals were using the investment vehicles to avoid paying taxes on renting out and selling real estate. This further aggravated inequalities in the market, they said.

Property prices in Luxembourg rose by a staggering 91.4% between 2007 and 2020, a report published by Eurostat in July said. Lawmakers last year called on the government to produce a study on the impact of investments funds on the real estate market.

The finance ministry is planning a wide-reaching tax reform before the next election in 2023 and has pledged to review the taxation of specialised investment funds but the opposition pushed for quicker action in its motion.

The ADR--who had signed the motion in support--ended up abstaining in the vote over the document’s wording that includes only property owners living in Luxembourg and not those based abroad.

Public debt rose to around 30% of GDP--the highest ever--in the wake of the coronavirus pandemic, kicking off a debate on tax justice and how to raise more income for state coffers.

Prime minister Xavier Bettel (DP) this month shot down the possibility of introducing a wealth tax after CSV party president Frank Engel floated the idea of an inheritance tax.

A second motion--to abolish stock options for employees--also failed. Stock options were introduced in 2002 and allow employees to have some of their income paid in stock options, an interesting proposition for high earners. The stock options are taxed at a lower rate (13.27-22.75%) than the 42% maximum income tax bracket.

The CSV on Tuesday acknowledged that they were in government when the measure was introduced but said it was now time to abolish them to spread the tax burden more equally in society.

Updated, 24 September at 9am: Article amended to clarify the ADR’s position