Luxembourg follows the European Union (EU) value added tax (VAT) compliance rules, but sets its own VAT rate. The only provision set out by the EU is that this rate is above 15%.
Luxembourg’s standard VAT rate is currently set at 17%. There are two reduced VAT rates of 14% and 8%, and a super reduced VAT rate of 3%.
As part of their VAT obligations, suppliers of goods or services VAT registered in Luxembourg must charge the appropriate VAT rate, and collect the tax for onward payment to the Luxembourg government through VAT returns.
There are a small number of VAT exemptions in Luxembourg. These services include doctors’ and dentists’ services, financial and insurance services, postal services, education, cultural services, and certain sporting activities.
The VAT registration threshold in Luxembourg for resident businesses is set at €35,000. As of January, 2025, it will increase to €50,000. There is no threshold for non-resident businesses.
The distance-selling threshold for businesses in other EU countries is €10,000. If a business’s cross-border sales with any EU country (intra-community transactions) exceeds this amount, it must register for VAT in Luxembourg.
Non-EU businesses selling in Luxembourg are not required to appoint a fiscal representative.
Foreign businesses registered as non-resident VAT traders in Luxembourg are obliged to follow VAT legislation regarding bookkeeping, recording, and processing of invoices. This includes:
Preparing invoices with the disclosure details outlined in Luxembourg VAT laws
Maintaining accounts and records, which must be held for at least 7 years
Correct invoicing of customers for goods or services in accordance with the Luxembourg time of supply VAT rules
The tax point (time of supply) rules in Luxembourg determine when the VAT is due. It is then payable to the tax authorities 30 days after the VAT reporting period end (monthly or quarterly).
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