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Luxembourg to raise VAT registration threshold

  • VAT
  • 13 September 2013 | Richard Asquith

Luxembourg to raise VAT registration threshold

The European Commission has granted Luxembourg a derogation from the EU VAT Directive to enable it to raise the annual VAT registration threshold from €10,000 to €25,000.  This follows a similar move recently by Italy to raise the VAT registration threshold to €60,000.

The current EU VAT Directive 2006/112/EC permits member countries to exempt companies from registering and complying for VAT if their taxable turnover is below €5,000 per annum.  Countries which acceded to the EU after 1978 may use their existing threshold at the time of joining the EU.

EU allows higher VAT registration thresholds

Member states are permitted to seek a variation, or derogation, on the EU VAT Directive rules, and many countries have done so for the VAT registration threshold to reduce the compliance burden on smaller businesses.

Luxembourg VAT applied to the EC to raise further its VAT registration thresholds in October 2012.  This has now been approved this month, and is effective with immediate effect.  The derogation will only allow until the end of 2016, when it must be renewed.

Luxembourg companies below the annual sales threshold may still apply for a voluntary VAT registration.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.