VAT in Luxembourg

Luxembourg is a member of the European Union (EU) and draws up its tax rules according to the laws or directives issued from Brussels by the EU. The current VAT directive applies to all 27 member states of the European Union, and it governs the rules on VAT compliance, and in some part, covers the setting of VAT rates.

As an EU member state, Luxembourg is obliged to implement the VAT directives, which provides guidance on VAT. Where there is a conflict, the European Union’s directive takes precedence. Luxembourg is a member of the European single market economy and uses the Euro (€) as its currency. In Luxembourg VAT is known as: Taxe sur la Valeur Ajoutée, or TVA.

VAT registration in Luxembourg

Both EU and non-EU businesses may trade in Luxembourg without establishing a local presence. This is known as non-resident VAT trading. There is no VAT threshold in Luxembourg for the registration of non-resident traders, but you will need one to record transactions and your customers in Luxembourg will want proof that you have obtained one.

There are strict rules on the situations where VAT registration is permitted. Common scenarios that require Luxembourg VAT registration include:

• Importing goods into Luxembourg;
• Organising live events, conferences, etc. in Luxembourg;
• Holding goods in a warehouse in Luxembourg as stock for resale;
• Buying goods within Luxembourg that are subsequently re-sold in-country;
• Selling goods from Luxembourg to other EU member states;
• Distance-selling to private individuals in Luxembourg, e.g. internet retailing or trading through an e-commerce platform.

Registering for Luxembourg VAT generally takes between 3-4 weeks once all documentation has been submitted to the tax authority, but this varies from seller to seller and will depend on the specifics of an individual company.

Luxembourg VAT compliance

There are detailed rules controlling the recording and processing of Luxembourg transactions for VAT purposes. This includes guidelines on:

• Luxembourg invoice requirements;
• When to issue a Luxembourg tax invoice;
• Foreign currency reporting;
• Credit notes and corrections;
• Correcting entries from prior returns;
• Which accounting records must be maintained.

Luxembourg VAT rates