VAT penalties and new registration threshold in Luxembourg

Luxembourg has increased VAT penalties on late returns and tax payments.

The current fine of €5,000 for non-compliance will be increased to €10,000, with up to 50% of the VAT due assessed as potential penalties. Also, businesses preparing and submitting VAT returns on behalf of other companies (eg. accountants or tax advisors) may be jointly liable for the VAT obligations of their clients. Finally, as it happens in many other countries, Luxembourg foresees prison sentences of up to five years for VAT fraud.

In addition to these new penalties, Luxembourg has also increased the registration threshold for small and medium enterprises from €25,000 to €35,000. This threshold only applies to locally established companies. It does not apply to foreign companies who need to register in Luxembourg. These businesses are obliged to register from the first taxable transaction made in the country.

If you are considering a VAT registration in Luxembourg or you are already registered in the country, these changes are an opportunity to double check your obligations to ensure that you are currently meeting all compliance requirements. Marosa can assist you with a health-check of all your Indirect tax returns in Europe, including invoicing, tax point and archiving rules.


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