Luxembourg

VAT Basics

VAT Deduction Limits in Luxembourg

Input VAT is generally deductible as long as the goods or services are used for business purposes.  
There are no particular VAT deduction rules. Travel expenses, vehicles, including the fuel, business gifts, and training and conference tickets are 100% deductible if related to a business use.
A valid and fully compliant VAT invoice must be issued for each expense on which VAT is deducted.  

Check the official information about input VAT deduction in Luxembourg. Also, Art. 48 of the Luxembourgish VAT Law regulates this topic.

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Statute of Limitations in Luxembourg

The statute of limitations is five years in Luxembourg. However, there is an extended prescription period of ten years in case no return was filed.
The statute of limitations period determines the periods on which the tax authority can go back to review the information declared, and apply additional VAT assessments, penalties or interests.  
The statute of limitations also determines the period a taxpayer can voluntarily correct any errors on past submissions, as well as deduct input VAT. This is four years. A valid VAT invoice or customs document is required to claim for input VAT refund.

Tax point rules in Luxembourg

The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to submit and pay the VAT return.

• General rule: When the supply of goods or services is subject to the mandatory issuance of an invoice, then the tax point is by the of issuing the invoice. If you have not issued an invoice, then VAT is due by the time of the supply of the goods or services, or by the time a prepayments or advanced payment is received.
• Prepayment: when there is an obligation to issue an invoice and it is issued with the prepayment, then VAT is due before the 15th of the month following the month during which the transaction takes place. In case there is no obligation to issue an invoice, the tax point is at the time of receiving the prepayment.
• Continuous supplies of services: if the customer is liable to self-assess the VAT, then the VAT becomes due by the end of the calendar year.  
• Intra-Community acquisitions and supplies: Tax point occurs on the invoice date or the 15th day of the month following the month in which the invoice was issued, whichever occurs earlier.
• Import: Tax point occurs when the goods are imported according to the relevant import documents.

This is regulated in Art. 24 of the Luxembourgish VAT Law.

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VAT registrations and simplifications in Luxembourg

When do I need a Luxembourgish VAT number?

Generally, a foreign business must register for VAT (Value Added Tax) in Luxembourg as soon as a taxable supply is made. The following are the usual examples of taxable transactions:

• Domestic supply of goods not reverse charged: A supply of goods located in Luxembourg where the reverse charge does not apply requires a VAT registration of the supplier.
• Supply of services not reverse charged: Foreign non-established businesses supplying services on which Luxembourgish VAT is due by the supplier must register for VAT. These services are rather exceptional, as the general B2B rule would apply.
• Imports of goods in Luxembourg: when a non-established trader imports goods under his or her own name, a VAT registration is required in the country.  
• Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
• Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT.
• Intra-Community supply: Supplying goods another Member State is also a taxable transaction that obliges the supplier to register for VAT.  
• Distance sales: When applicable in case the Seller has not joined OSS. See the E-commerce manual for more information.

Non-established companies must apply for VAT registration before performing any of the above taxable transactions. There is no turnover threshold applicable to non-established companies.  

Luxembourgish established companies can benefit from a VAT registration exemption threshold of EUR 35,000 (annual turnover during a calendar year excluding tax). However, these businesses must inform the tax administration about the annual turnover realized during the previous calendar year. Also, in case they perform any intra-Community transaction they become liable to file an electronic VAT return. Established entities can opt for a voluntary VAT registration.

Backdated registrations are allowed in Luxembourg. You will need to regularize past reporting periods as from the registration date.  

Check here the official information about VAT registrations in Luxembourg.

Find here the VAT registration form, or initial declaration form, for download.

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Fiscal representative requirements in Luxembourg

Some countries require all non-EU companies to appoint a fiscal representative when registering for VAT. However, this requirement does not apply in Luxembourg.

In any case, non-EU based businesses registering for VAT in the country must consider that, upon registration, the tax office may require a bank guarantee to ensure the payment of the VAT and eventual penalties connected to the taxable activity in the country.

The bank guarantee requirement is regulated under Art. 66 of the Luxembourgish VAT Law.

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VAT groups in Luxembourg

VAT grouping is possible for businesses established in Luxembourg. Group members must be closely bound by financial, economic, and organizational links, so they may form a VAT group and be treated as a single taxable person for VAT purposes.

In addition, the following VAT grouping rules apply in Luxembourg:

• Only Luxembourgish established businesses and local branches of foreign companies can be part of a VAT group.
• Intra-group transactions are disregarded for VAT purposes.
• Every group member is jointly and severally liable for the VAT debts and penalties of the entire group.
• One of the members of the group is established as the group representative. This member becomes responsible for dealing with all VAT requirements for the whole group: including the submission of consolidated VAT returns and making VAT payments.
• The VAT group must operate for at least two calendar years.

Find here additional information about VAT groups in Luxembourg. VAT group regime is regulated under Art. 60.ter VAT Act.

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Consignment and Call-off stock in Luxembourg

The EU introduced a call-off stock simplification that all EU Member States must implement. This was put into place so that businesses that operate under a consignment stock structure do not have to VAT register in the country of destination. Luxembourg has introduced the consignment stock simplification.

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Luxembourgish Bad Debt Relief

Bad debt refers to an unpaid invoice for which the Supplier has paid the VAT to the tax administration: this is, an invoice has been issued with VAT, reported in the VAT return and the VAT amount has been paid to the tax authorities but the whole price has not been collected from the customer. This is often due to the client´s bankruptcy, insolvency or simple missed payments to suppliers. In these cases, most countries allow to recover the VAT initially paid to the authorities, however, the conditions change from one country to another.

Bad debt relief refers to the possibility of recovering the VAT from that invoice. Luxembourg allows for bad debt relief when it can be reasonably expected that the customer will not pay the invoice.

The supplier must adjust the input VAT on the amount of the bad debt within 2 years since the VAT was due.

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Luxembourgish Import Deferral and Postponed VAT Accounting

Luxembourg has introduced a postponed import VAT accounting mechanism where import VAT can be reported as input and output VAT (reverse charged) in the VAT return instead of being paid to the authorities upon importation. Postponed import VAT accounting applies automatically provided that the importer is VAT registered in Luxembourg. Taxpayers do not need to file a separate application.

In case the importer is not VAT registered in the country, then import VAT will be collected by Customs.

Import VAT deferral, meaning delaying the payment of VAT for a given period, is not applicable in Luxembourg.

Find here more information about postponed import VAT accounting in Luxembourg.

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Luxembourgish Customs and VAT warehouses

Customs or bonded warehouses are available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due. Sales within the customs warehouse are zero-rated. Luxembourg has available customs warehouses as well as other customs storage.

VAT warehouses are available for cleared goods (T2). These goods have already paid customs duties. The conditions are similar to those of Customs warehouses. The goods allowed are those included in Appendix V of the VAT Directive. Luxembourg has not implemented this particular option.

Read more about Customs warehouses in Luxembourg. Also check here the different storage and temporary storage options in Luxembourg. Finally, find here official EU guidelines on Customs’ special regimes.

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Special VAT Schemes in Luxembourg

Businesses may benefit from the following special VAT regimes:

1. Small businesses: this is a VAT exemption scheme that applies to established companies with a turnover (exclusive of VAT) not exceeding EUR 35,000 in the previous calendar year, or in the current tax year. The businesses under small business scheme do not need to charge VAT on their supplies, however, they need to declare their annual turnover every year. These businesses are not entitled to input VAT deduction. Find more information here.
2. Farmers.
3. Travel agents.
4. Margin scheme.
5. Cash accounting. Find more information here, under the section Declaration of turnover based on receipts.

Have a look at our website articles about TOMS and the Cash accounting scheme.

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Reverse Charge in Luxembourg

Reverse charge for non-established companies in Luxembourg

According to art 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses.

Luxembourg has only introduced the reverse charge mechanism on domestic supplies made by non-established companies in the following scenarios:

This is regulated in Art. 61 (4 and 5) in connection with Arts. 14.1.e) and f) and Art. 17.1.b) Luxembourgish VAT Law

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Reverse charge on B2B services

Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located.

According to the general B2B rule, any business resident outside Luxembourg supplying services to an Luxembourgish based customer will not charge any VAT and the transaction will be reverse charged by the customer.

There are however a number of exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in Luxembourg provided the following conditions are met:

• Services connected to immoveable property are located where the property is located.
• Passenger transport services will be located where the transport takes places (apportioned if necessary).
• Catering services are located where the catering takes place.
• Short term leasing of means of transport are located where the vehicle put at the disposal of the customer.
• Access to conferences, fairs and exhibitions is located where the event takes place.

The general rule may also be deviated where the supplier has a permanent establishment in the country of the customer and the PE has intervened in the supply.

Find out more about the rules for B2B services in the EU here.

Also, find here, here and here official information by the Luxembourgish tax authorities.

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Reverse charge on specific goods and services in Luxembourg

Domestic reverse charge may also apply to certain domestic supplies goods and services made by companies established in Luxembourg:

• Supplies of CO2 emission allowances.
• Supplies of electricity or gas certificates (certificates of origin).
• Supply of mobile telephones, integrated circuit devices, game consoles, tablet PCs, laptops and raw and semi-finished metals (from January 2024): the reverse charge applies unless the net sales amount is less than EUR 10,000.

Find here more information about the liability to pay the tax in Luxembourg.

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VAT returns in Luxembourg

Frequency of VAT returns in Luxembourg

The frequency of filing is determined on the basis of the annual turnover of the taxable person and the intra-community acquisitions of goods or services performed. By the end of each year, the tax administration reviews the reporting frequency applied and, in case it is required, request its adjustment for the reporting next year.

Find here the official information about reporting periods and deadlines in Luxembourg.

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Due date of LuxembourgishVAT returns

The VAT return deadlines applicable in Luxembourg are the following:

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VAT payments in Luxembourg

VAT payments in Luxembourg can be made via wire transfer or direct deposit to the tax authority bank account:

• Account: IBAN LU35 0019 5655 0668 3000
• BIC: BCEELULL
• Payment reference: The taxable person must clearly state their VAT number and the taxation period for which the payment is to be made.

The address of the beneficiary is the following:

Recette Centrale
308, Route d'Esch
L-1471 Luxembourg

The deadline for payment of the tax is identical to the deadline for filing declarations.

Taxpayers have access to consult the status of their VAT account using the eTVA Consultation application and their LuxTrust certificate.

Have a look here, and here at the official information about how to pay VAT in Luxembourg.

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VAT Refunds in Luxembourg

The excess of input VAT is automatically carried forward to the next reporting period. This is, when a taxable person declares more VAT deductible – e.g., due to purchases-, than VAT collected from sales, the difference is a VAT credit which shall be reimbursed to the taxpayer.
However, when in credit position, the taxable person may submit a VAT refund request in written. In principle, this refund request can be submitted:

• Monthly, if the amount is EUR 1,200 or higher.  
• Annually, provided that the amount is higher than EUR 2.40.

The refund may be deducted in the amount of any outstanding debts to the tax administration or the Luxembourgish State.
As a general rule, the deduction of input VAT must be declared on the VAT return relating to the period in which the VAT became payable.
The refund of the accepted amount is made by the Recette Centrale TVA services to a postal or bank check account communicated by the taxable person to the administration.

Check here and here more details about VAT refunds.

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Nil and corrective VAT returns in Luxembourg

A nil VAT return needs to be submitted even if there are no transactions to be reported for that period.  
Errors or omissions in a VAT return must be corrected, even if they do not impact on the VAT position for the corresponding period. You will need to submit a corrective return. The corrective VAT return replaces the previous return submitted for the same period in full. This means that the corrective return must include all details that were already correct in the original return as well as the corrected details.
To submit a corrective VAT return on the eCDF platform, you need to go to "Submitted returns". By clicking on the 'Copy' button, the taxpayer can create a copy of their return which is available under 'Forms / Pending', which is useful if you wish to file a new return after submitting one that contained errors.
When submitting a corrective VAT return, penalties and interest may apply.  
In any case, the general deadline to make corrections on previous reporting periods is 4 years calculated from the accounting period or tax year which the tax concerns.

Find  here the official instructions about making corrections to VAT

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VAT Penalties in Luxembourg

Find below an overview of the applicable penalties for late VAT registration, late submission of a VAT return and late payment of VAT:

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Luxembourgish Tax Authorities Contact

Competent tax offices Directory.
Luxembourg Imposition 10 (assujettis étrangers)
308, route d’Esch
L-1471 Luxembourg
PO Box: B.P. 31. L-2010 Luxembourg

• Tél : (+352) 247 80669
• Fax : (+352) 247 90400
• Email : lux.imp10@en.etat.lu  

Administration de l’enregistrement, des domaines et de la TVA
Bureau d’imposition 10 / Steuerbüro 10
14, Avenue de la Gare
L-1610 Luxembourg

• Tél : 00352 247 80678
• Fax: 00352 247 90400

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ESL/ESPL returns in Luxembourg

Due date and frequency of ESL returns in Luxembourg

The due date for submitting monthly or quarterly ESL returns is always the 25th day of the month following the declaration period.
ESL returns shall be submitted electronically on eCDF.
The standard reporting period is monthly. However, the reporting period shall be quarterly if the value of the intra-Community supplies does not exceed EUR 50,000 in the current or in any of the previous four quarters.
Taxable persons performing intra-Community supplies of services may opt to file quarterly or monthly returns.

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Nil and corrective ESL returns in Luxembourg

If there are no intra-Community transactions to be reported in a given period, a nil an ESL is not due in Luxembourg.
Changes in the tax base
In case there are changes in the tax base for intra-EU supplies of goods or services (for example, discounts, credit notes, cancellations, etc.), the change must be reported:

• separately for each customer;
• for the period in which the change occurred.

Therefore, a corrective ESL must be submitted to:

• calculate the total sales value of the goods delivered and services provided during that period;
• deduct from that amount the total sum of any changes that occurred during the same period;
• indicate the corresponding balance/result in the recapitulative statement.
  A negative amount must be preceded by the sign '-'.

Corrections due to incomplete or inaccurate information reported in ESL return for goods
Similarly, in case of mistakes or omissions in the information reported, the correction can be made in i) a new ESL return or ii) within the ESL return for the current period, completing the separate section III. Corrections.

Corrections due to incomplete or inaccurate information reported in ESL return for services
Finally, in case of mistakes or omissions in the information reported in an ESL return for services, the correction can be made by completing the section II. Corrections of either i) a new ESL return for services – provided that the next reporting period was not filed, or ii) within the ESL return for the current reporting period, including both the information for the current period in section I, and the data corrected in section II.  
You will find here the official information on how to correct ESL returns in Luxembourg.

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Penalties for late ESL returns in Luxembourg

Failing to comply with ESL regulations is punished with a penalty that may range from EUR 250 to EUR 10,000.

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Intrastat returns in Luxembourg

Frequency of filing and due date of Intrastat returns in Luxembourg

Like in most EU countries, Intrastat returns are filed monthly. They follow the calendar month.  
Intrastat returns are due by the 16th day of the following month, in case the return is submitted electronically.
In case you need to submit the Intrastat return in paper form, you need to send it by the 6th day of the following month. In practice, the Intrastat returns in paper form are accepted only for simplified Intrastat returns. Find below the postal address and email contact:
STATEC Service Intrastat  
Boîte postale 304 L-2013 Luxembourg  
Declarations by e-mail (Excel, PDF or JPG) are tolerated: info-intrastat@statec.etat.lu  
Intrastat returns must be completed in EUROS currency in Luxembourg.

Find here more information about the official deadline to submit Intrastat returns.

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Luxembourgish Intrastat thresholds

The following annual Intrastat thresholds apply in Luxembourg (calendar year):

• Arrivals (simplified): EUR 200,000 – EUR 375,000
• Arrivals (detailed): EUR 375,000 – EUR 2,500,000
• Arrivals (extended): higher than EUR 2,500,000
• Dispatches (simplified): EUR 150,000 – EUR 375,000
• Dispatches (extended): EUR 375,000 – EUR 4,500,000
• Dispatches (extended): higher than EUR 4,500,000

These thresholds are computed annually according to the calendar year. Once filed, a complete calendar year needs to be covered by a company in order to stop filing these returns. For example, if a company exceeds the threshold in March 2023 on arrivals, Intrastat returns for arrivals are due until December 2024. These thresholds are calculated according to the invoice value. The authorities monitor the thresholds and often send letters to each taxpayer requiring them to file missing Intrastat return.

Also, you can find here and here the official information about Intrastat thresholds in Luxembourg.

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Reporting of specific scenarios in Luxembourg

Very often, the transactions reported in the Intrastat return are standard sales from one taxable person to another. However, a number of scenarios have specific reporting requirements.  
The list of transaction codes for Intrastat in Luxembourg can be found here by downloading the Explanatory note available.

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Nil and corrective Intrastat returns in Luxembourg

If no transactions are to be reported, a nil Intrastat return must be filed to avoid unnecessary reminders.
Concerning correcting Intrastat returns, to correct a return previously submitted in electronic form, you need to select the “Replace” option. The system will copy the previous declaration into the new return form. After making the adjustments (additions, corrections, deletions) and the transmission, this new declaration will replace the previous.one.
If you submitted the Intrastat returns that needs to be corrected in paper form, you must submit a new declaration for the same period mentioning, “Cancel and replace”. This may involve making additions, corrections or deletions.

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Intrastat Penalties in Luxembourg

Taxpayers may incur in penalties for late submission or missing or inaccurate Intrastat returns. The penalty may range from EUR 250 to EUR 2,500.