E-Commerce & B2C Services in Luxembourg
The ECOFIN Council accepted measures geared towards improving the VAT environment for e-commerce enterprises on December 5, 2017.
These new regulations, which took effect on July 1, 2021, expand the existing system for e-services and guarantee that VAT is paid in the Member State of the end consumer.
Read more about B2C services & E-Commerce in Luxembourg in our comprehensive guide.
B2C Services in Luxembourg
Article 15 of the VAT Law defines supplies of services as “any supplies that are not goods supplies, intra-Community acquisitions, or imports.”
Types of taxable services:
- The acquisition of intangible assets such as property or rights.
- The duty to do or abstain from performing any act or activity.
- The execution of services required by law or according to a public authority’s request.
- The delivery of specific works.
Time of Supply
The “time of supply” or “tax point” is the moment at which VAT becomes payable (or the chargeable event happens). The fundamental moment of supply for goods is when the goods are supplied, and the power of disposal is transmitted. The fundamental point of supply for services is when they are completed.
With the exception of services subject to VAT in the receiving country, the exact time of supply of goods or services may be delayed by the issuing of an invoice (if an invoice is required), but no later than the 15th day of the month following the month during which the basic period of supply occurs.
The time of supply is when the invoice is issued if the provider provides an invoice before this date. Continuous supply of services is subject to specific regulations. The time of supply for supplies of services liable to VAT in the receiving country is when the taxable event takes place (that is, when the supply is completed).
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Digital Services in Luxembourg
Electronically provided services are commonly defined as those that are offered over the internet or an electronic network and are, by definition, automated, need little human intervention, and cannot be guaranteed in the absence of information technology.
TBE services delivered electronically include website development, web hosting, remote maintenance of programs and equipment, software, and update distribution. This rule is subject to a provision on efficient use and pleasure, which states that if the place of supply of telecommunications, broadcasting, or electronically supplied B2C services would otherwise be in Luxembourg. Still, the services are used and enjoyed outside the EU; the services are not subject to Luxembourg VAT.
Telecommunications, broadcasting, and electronically delivered services to ultimate customers in Luxembourg are subject to a specific system (“TBE services”). The goal of this regime is to apply the destination principle to digital supplies, i.e., to tax them where they are consumed.
Under Chapter VIII Section 5 of the Luxembourg VAT law, on or after July 1, 2021, a One-Stop-Shop (OSS) scheme is implemented to simplify the registration and reporting requirements for various cross-border services and commodities supplied to nontaxable people. These regulations implement Chapter 6 of Title XII of the EU VAT Directive, revised by Council Directives (EU) 2017/2455 and 2019/1995 (the so-called “VAT e-commerce rules”).
Global VAT Compliance is up to date with all new rules & regulations and provides VAT/GST solutions to companies offering digital services worldwide.
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E-Commerce in Luxembourg
On December 5, 2017, the ECOFIN Council approved measures aimed at enhancing the VAT framework for e-commerce businesses. These new rules, which came into effect on July 1, 2021, extend the existing system for e-services and ensure that VAT is paid in the Member State where the final consumers are located.
The e-commerce package is mentioned in the VAT law under Directive 2017/2455 of December 5, 2017, Directive 2019/1995 of November 21, 2019, and Implementing Regulation 2019/2026 of November 21, 2019.
All businesses selling goods and services to non-business consumers in other Member States will be able to manage their VAT obligations in the EU through a single, user-friendly online platform in their own language (known as the “One-Stop-Shop”).
OSS/ IOSS
As of July 1, 2021, we’ve seen a shift in the rules governing the location of distance sales of goods from another EU Member State or from third countries to non-taxable individuals. Now, most transactions are taxed in the Member State where the consumption occurs.
To make life easier for businesses, the EU has introduced an optional scheme known as the One-Stop-Shop – Import One-Stop-Shop (OSS-IOSS). This scheme is a game-changer for businesses, eliminating the need for them to register for VAT in different Member States of consumption to declare and pay VAT. With this system, VAT is declared and paid to a single Member State, simplifying the process significantly.
The OSS is applicable to the supply of services to non-taxable individuals in a Member State where the supplier is not established, distance sales of intra-Community goods, and sales of products from non-resident suppliers to non-taxable individuals in the EU for consignments valued at EUR 150 or less. This is a major step forward in streamlining and simplifying VAT obligations for businesses across the EU.
GVC can help you with your OSS/IOSS requirements in the EU and Luxembourg. Visit our website by clicking HERE to find more information about our services.
Last Updated: 08/12/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
