Luxembourg VAT Service
Looking to expand your e-commerce business to Luxembourg, here is FZCO’s guide to VAT in Luxembourg service.
VAT Registration in Luxembourg
Luxembourg is a member of the European Union (EU) and as such, VAT registration in Luxembourg it follows the EU’s value-added tax (VAT) system. The current standard VAT rate in Luxembourg is 17%, which is applied to most goods and services. However, some goods and services are subject to reduced VAT rates of 8% and 3%, and some are exempt from VAT.
Businesses that are registered for VAT in Luxembourg must charge VAT on their sales, and they can also claim back the VAT they have paid on their purchases. However, if a business’s annual turnover is below a certain threshold, it may be exempt from registering for VAT.
When should I VAT register in Luxembourg?
You are a business operating in Luxembourg, you are required to register for VAT if you meet certain conditions. Generally, you must register for VAT if:
- Your business is established in Luxembourg and you carry out taxable supplies of goods or services in Luxembourg.
- Your business is not established in Luxembourg but you are supplying goods or services to customers in Luxembourg and you exceed the distance selling threshold of €100,000 per year.
- Your business is not established in Luxembourg but you are importing goods into Luxembourg from outside the EU.
It is important to note that even if your business does not meet the above criteria, you may still choose to voluntarily register for VAT in Luxembourg. Voluntary registration may be beneficial if you are making significant purchases subject to VAT, as it allows you to reclaim VAT on those purchases.
Once you have determined that you need to register for VAT in Luxembourg, you must submit an application to the Luxembourg tax authorities. The application process can be done online, and you will need to provide information about your business, including your tax identification number, address, and turnover.
Once you are registered for VAT in Luxembourg, you must charge and collect VAT on your taxable supplies of goods and services, and you must comply with all VAT reporting and payment obligations.
What documents required for VAT registration in Luxembourg?
- Articles of association.
- A copy of the Identity card or passport of the business owner or Shareholders.
- Proof of address
- VAT number in EU member state.
- incorporation certificate.
Luxembourg VAT Returns
Businesses that are registered for VAT in Luxembourg must file periodic VAT returns with the Luxembourg tax authorities. The frequency of the VAT returns depends on the size and turnover of the business. Typically, businesses must file monthly or quarterly VAT returns, but small businesses with an annual turnover of less than €112,000 may file annual VAT returns.
VAT returns must be filed electronically through the Luxembourg tax authorities’ online platform. The VAT return must include all the VAT charged on sales made during the relevant period, and the VAT paid on purchases made during the same period. The difference between the VAT charged and the VAT paid is the net VAT payable or refundable.
VAT payment in Luxembourg
If the net VAT is payable, the business must pay the amount due to the tax authorities by the due date specified in the VAT return. Late payment may result in penalties and interest charges.
VAT Refund in Luxembourg
If the net VAT is refundable, the business may request a VAT refund from the Luxembourg tax authorities. The refund may be subject to a review process by the tax authorities, and may take several weeks or months to be processed and paid.
It is important for businesses to keep accurate and up-to-date records of their VAT transactions and to comply with all VAT regulations in Luxembourg. Failure to do so may result in penalties and other sanctions from the tax authorities.
Businesses operating in Luxembourg should seek professional Tax advice or accountant to ensure they are complying with all relevant VAT regulations.