Luxembourg VAT rates and VAT compliance
Luxembourg VAT rates
Whilst Luxembourg follows the European Union VAT compliance rules, it still sets its own VAT rate. The only proviso is that it is above 15%. 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 tax authorities through a VAT filling: see Luxembourg VAT returns briefing.
The current rates are:
|Rate||Type||Which goods or services|
|16%||Standard||All other taxable goods and services|
|14%||Reduced||Certain wines; solid mineral fuels, mineral oils and wood intended for use as fuel with the exception of wood for heating; washing and cleaning products; printed advertising matter; heat, cooling and steam with the exception of district heating; safe custody and administration of securities; administration of credit and credit guarantees by a person or organisation other than that granting the credit|
|8%||Reduced||Cleaning in private households; minor repairs of bicycles, shoes and leather goods, clothing and household linen; hairdressing; district heating; natural gas; electricity; firewood; LPG; cut flowers and plants for decorative use; some works of art and antiques|
|3%||Reduced||Foodstuffs; soft drinks; children's clothing and footwear; water supplies; certain pharmaceutical products; certain medical equipment for disabled persons; domestic passenger transport; certain books (including e-books); certain newspapers and periodicals; admission to cultural events and amusement parks; some pay TV/cable TV; agricultural supplies (excluding pesticides); hotel accommodation; restaurants (excluding alcoholic beverages); take away food; bars, cafes and nightclubs, cut flowers and plants for food production; some supplies of new buildings; some construction work on new buildings; admission to sports events; use of sports facilities; undertaker and cremation services; collection of domestic waste; some telephone services; some writers and composers services (royalties); raw wool; treatment of waste and waste water; some goods and services for consumption on-board passenger transport; some works of art, collectors items and antiques|
|0%||Zero||Intra-community and international transport|
Luxembourg VAT compliance
Foreign businesses, registered as non-resident VAT traders in Luxembourg are obliged to follow the local rules on bookkeeping, recording and processing of invoices. This includes:
- Preparing invoices with the disclosure details outlined in the Luxembourg VAT laws.
- Electronic invoices with proper signature, authenticity and agreement by the recipient.
- Maintenance of 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.
- Processing of credit notes and other corrections.
- Use of approved foreign currency rates.
What is the tax point for Luxembourg VAT?
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).
For most goods, it is the time of delivery or passage of title. For services, it is the completion of the service.
Need help with VAT compliance in Luxembourg?
Researching Luxembourg's VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.
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