VAT in Luxembourg

1. What is the VAT in Luxembourg?

In Luxembourg, the standard VAT rate is 15%, the lowest that can be applied in the European Union. Anyway, there are some exceptions that entitle you for a reduced VAT rate.  For example, a company with activity in management and safekeeping of securities is subject to a 12% VAT rate, while a 6% VAT rate applies for gas and electricity and only 3% for food products, books, newspapers, hotels and radio and TV broadcasting services. Tobacco is taxed differently, in a system provided by the Government. Small businesses in Luxembourg with an annual turnover of less than 10,000 EUR are not subject to VAT. No registration for VAT purposes is required, but if the company does register, it must charge VAT on their invoices and can reclaim VAT paid to their suppliers.

2. How can I get a VAT refund in Luxembourg?

If the company’s annual turnover is between 112,000 EUR and 620,000 EUR, a quarterly declaration must be filed in for VAT refund and if the annual turnover exceeds 620,000 EUR, the procedure should be performed monthly in order to get VAT refund. Even if these conditions are not met, any company must file a declaration every year for VAT return.

3. How can I register for VAT in Luxembourg?

Registration for VAT in Luxembourg is only mandatory businesses with an annual turnover that exceeds 10.000 EUR. There is no threshold for resident and non-resident businesses, and all companies engaging in commercial activity must register for VAT when they begin their activity. All businesses, resident and non-resident, or their representatives must file a declaration at the VAT Authority of Luxembourg, that is the Administration de l'Enregistrement et des Domaines. The procedure is completed when the company is issued a VAT identification number, in the form a ten digit number. Penalties do not apply for late registration, but they are available in case the VAT declaration is not correct.

4. How does intra-community VAT work in Luxembourg?

Intra-community supplies of goods and services are subject to a zero-rated VAT. There are, however some exceptions that apply to intra-community acquisition of goods in Luxembourg, the intra-community acquisition of a new means of transport into Luxembourg and the organisation of services from a provider based outside Luxembourg. These are subject to the Luxembourg VAT rates.

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