Luxembourg VAT Guide

Luxembourg VAT Guide for Businesses

The Grand Duchy of Luxembourg’s Value Added Tax (VAT) system came into effect in January 1970. The basic VAT Law of 12 February 1979 is based on EU VAT directives, as the country is a member of the European Union.

VAT is collected by the Registration and Property Administration (Administration de l’Enregistrement, des Domaines et de la TVA) which is separate from the direct tax administration.

The super reduced rate of 3% applies to certain foods, water supply, certain medicinal products, newspapers, books, etc.
The reduced rate of 8% is applicable to cleaning, hairdressing, minor repair of bicycles, shoes, leather goods etc.
The intermediary rate of 14% applies to washing and cleaning products, certain types of fuels, wines of fresh grapes with 13% vol. or less, etc.

The following must register for VAT

• A person established in Luxembourg who undertakes a taxable activity

• A person established in Luxembourg who assumes that their annual turnover will exceed EUR 35,000

• Any non-taxable legal person making intra-Community acquisitions of goods for an annual amount in excess of EUR 10,000 excl. tax

• Any person established in Luxembourg who is subject to the agricultural and forestry flat-rate taxation scheme

• Any person established in Luxembourg who supplies wine, sparkling wine, wood or capital goods for an annual amount in excess of EUR 35,000

• Any person established and registered for VAT in another EU Member State who carries out supplies of goods, including the dispatch or transport, to persons not registered for VAT and established or domiciled in Luxembourg, for an annual amount in excess of EUR 100,000 (i.e. businesses performing distance sales).

The registration for VAT must take place

• Within 15 days of the start of the activity for taxable persons that are not exempt from registration

• Before the first day of the month following the month in which the tax exemption limit is exceeded (during the same calendar year)

• For taxable persons exempt from registration and for legal persons not liable for VAT, before the following operations are carried out:
o Provision of services in another EU Member State for which only the buyer is liable for VAT
o Intra-Community acquisitions of goods subject to VAT in Luxembourg
o Purchase of services from providers established outside Luxembourg and where the buyer is liable for VAT.

Deadlines

In principle, taxable persons must pay the net amount of VAT (i.e. the positive result between the total of output VAT for one period minus the total of input VAT) before the 15th of the month following the end of the tax period. For this purpose, they must in principle file a return within the same interval.

For those taxpayers who submit only Annual return the deadline is before 1 March of the following year.

For those taxpayers who submit Monthly/Quarterly return besides Annual return, the deadline of submitting Annual return is before 1 May of the following year.

VAT Filing Frequency

The net turnover of the previous year should be considered. In case of a new entity the turnover should be estimated.

Below 30,000 EUR turnover there is no obligation to file return, however the Tax Authority should be informed about the calendar year turnover before 1 March.
Taxpayer has to submit Annual return if the net turnover is lower than EUR 112,000.
Taxpayer has to submit Quarterly and Annual return if the net turnover is higher than EUR 112,000 and lower than EUR 620,000.
Taxpayer has to submit Monthly and Annual return if the net turnover is lower than EUR 620,000

Invoicing Requirements for Luxembourg

The following information should be indicated on invoices in Luxembourg:

The date of issue
A sequential number, based on one or more series, which uniquely identifies the invoice
Supplier VAT number
Where the customer is liable to pay the VAT, customer VAT number
The supplier’s full name and address and of his customer
The quantity and nature of the goods or the extent and nature of the services
The date on which the supply was made or completed or the date on which the payment on account was made, insofar as a date can be determined and it differs from the date of issue of the invoice
Where the VAT becomes chargeable on receipt of payment in accordance with article 25 of the VAT Law, the mention “cash accounting scheme”
The VAT amount payable, except where a specific arrangement is applied for which the law excludes such a detail
The taxable amount per rate or exemption, the unit price exclusive of tax and any discounts or rebates if they are not included in the unit price
The VAT rate applied
Where an exemption is involved, reference to the appropriate provision of the Luxembourg VAT Law or the VAT Directive, or any indication that the supply is exempt
Where the customer is liable to pay the tax, the mention “reverse charge”
Where the travel agent scheme referred to in article 56bis applies, the mention “travel agent scheme”
For the supply of new means of transport: the information required for identifying the means of transport, including the nature, registration number, mark, type, carriage number, year of production, date of first use and the characteristics of the ships, aircraft, and motorized land vehicles referred to in section 1.3
Where the margin scheme is applied, the mention “special scheme – second-hand goods”, “special scheme – works of art” or “special scheme – collectors’ pieces and antiques”
Where the customer receiving a supply issues the invoice instead of the supplier, the mention “self-billing”
Where the person liable for payment of VAT is a fiscal representative for the purposes of article 66bis of the VAT Law, the VAT number of that representative, together with his full name and address.

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Agents and Fiscal Representatives

Appointing a VAT representative is optional in Luxembourg. If a non-resident business has VAT representation, all VAT obligations are transferred to a specialized resident operator.

The appointment of a VAT representative is possible in respect of the following transactions:

For the importation of goods into Luxembourg
The subsequent supply to the non-resident business or a 1/3 party; and
Services (such as handling and recovery operations) performed on these goods in Luxembourg between the import and the subsequent supply.

The VAT representatives and the taxable person are jointly liable for the payment of the VAT, interest and penalties.

Submission

Since January 2020, all VAT returns – whether they are filed monthly, quarterly or annually – must be submitted electronically through eCDF system.

Extended Filling Deadline

On case of monthly and quarterly return two-months extension is automatically granted by the Tax Authority. Regarding Annual return, the automatic extension is 8 months.

IOSS

Since 1 July 2021, VAT exemption on low value goods has been eliminated. Since that date, all sales of goods imported in the EU are subject to the VAT of the country of destination of goods, regardless of the value of the imported goods.

For sales of imported goods with a value lower than or equal to EUR 150, the seller can declare and pay the VAT due in all Member States with a single VAT administration by using the IOSS (“Import One Stop Shop”). He may then sell the goods VAT included to his buyer.

The IOSS system concerns distance sales of goods:

That are dispatched or transported by the seller from a third country or territory to the destination of a person in the EU
Whose value does not exceed EUR 150
That are not subject to excise taxes

If the seller opts for the IOSS to declare sales to private individuals, he must:

Submit a monthly VAT declaration electronically using the IOSS portal
Make a monthly payment of the corresponding VAT to the Member State of their IOSS identification
Keep detailed records of all sales declared via the IOSS, and keep such records for 10 years

If the seller does not opt for the IOSS, the individual buyer must pay the VAT due on import as well as any administrative fees to the carrier delivering the goods to him, at the time of receipt of his order.

SAF-T / FAIA

The OECD has defined a standard audit file format (SAF-T) for tax audits and a standard set of tests to be performed during an audit. Luxembourg is one of the countries which have implemented the SAF-T.

In Luxembourg, the predefined file is called the “Registration Administration computerized audit file” (FAIA) and is largely modelled on the OECD “Standard audit file-Tax”. In principle , the VAT Tax Authorities can request a FAIA compliant file for the taxable years starting 2011. Every VAT inspector has the discretion to demand the file at the occasion of an audit. Currently, the scope of FAIA includes businesses that are subject to the Luxembourg Standard Chart of Account (hereinafter “SCA”).

The following type of companies are in scope of the SCA:
• Corporate entities with limited liabilities (SA, SARL, SCA, Société Coopérative, SE)
• Individual business owners, General Corporate Partnerships (SNC) and Limited Corporate Partnerships (SCS), if their annual turnover exceeds EUR 100,000 (exclusive of VAT)
• Branches and establishments set up in Luxembourg by businesses governed by foreign law.

The format for the FAIA file should be XML. For any additional information requested, other formats are also accepted by the VAT authorities, if the files are easily legible.

The Luxembourg FAIA file covers the records directly or indirectly relevant to verify the correctness of the VAT reporting , and that the company keeps electronically. The obligatory and facultative fields of the Luxembourg FAIA file are based on the OECD’s SAF-T version 2.0., available on the website of the VAT authorities.

Intrastat

In principle, every natural or legal person established in Luxembourg who trades in goods with other EU Member States (intra-Community operators) must provide statistical information about these exchanges to the STATEC.

Registration

Based on the VAT returns filed, STATEC is aware of Intra-Community movements of goods and send a notification to the taxpayer to inform of obligations.

Threshold

No declaration must be submitted if the annual turnover is lower than EUR 200,000 for arrivals and EUR 150,000 dispatches. It is required to declare as soon as it exceeds one of the following thresholds:

Threshold for Simplified declaration for arrivals is EUR 375,000
Threshold for Detailed and Extended declaration for arrivals is EUR 2,500,000
Threshold for Simplified declaration for dispatches is EUR 375,000
Threshold for Detailed and Extended declaration for dispatches is EUR 4,500,000

Deadlines and Filing Frequency

Businesses must declare their intra-Community exchanges on a monthly basis at the latest:

On the 6th working day of the month following the month of reference, if the report is submitted on paper;
On the 16th working day of the month following the month of reference, if the report is submitted electronically.

Submission

In Luxembourg, these declarations must be made to the Intrastat Department of the National Institute for Statistics and Economic Studies (Institut national de la statistique et des études économiques – STATEC).

Businesses may send their reports In paper format or electronically through the IDEP software package.

Recent VAT Updates in Luxembourg

Jan 2022: Luxembourg imposes new e-invoicing requirement on B2G supplies

Feb 2019: Luxembourg issues Brexit-related VAT Reclaim & VAT Compliance Alert

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Luxembourg VAT Guide