Luxembourg VAT Groups

From 31 July 2018, Luxembourg has introduced VAT Groups which permit closely bound, but legally independent, tax payers to file a single, combined VAT return. This enables them to minimise VAT payments and potential losses. This is based on Article 11 of the EU VAT Directive, and follows the ECJ Commission v Luxembourg C-274/15 judgement, which banned the former independent group of persons scheme for certain financial services groups.

The conditions for Luxembourg VAT Groups are:

• Members of the group must have financial, economic and organisational ties. This can include legal control through voting rights or shareholders. They must be involved in the same business line, and their activities are complementary.
• Members may only be included within one such VAT Group.
• Members of the group should be legally established in Luxembourg. An entity with a foreign fixed establishment may be in included.
• All transactions to be declared within the group return must be standard rated.
• A single member must be appointed as the reporting member, which is typically the group holding company or the largest business by turnover. All members share joint liability for the other members’ VAT liabilities

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