VAT Registration in Luxembourg
Taxable persons established outside the EU may need to furnish a guarantee to ensure their VAT liability during VAT registration. The VAT authority may demand a cash deposit or a letter of indemnity from an approved bank to secure the guarantee.
The amount of the guarantee will be determined by the VAT authority based on the expected value of taxable transactions carried out by the taxable person. The guarantee has no expiration date. The obligation to provide a guarantee and security should be met within a month of receiving the request from the VAT authority.
Read all about VAT registration in Luxembourg in our comprehensive guide.
Register for VAT in Luxembourg
The VAT registration form should be submitted to the tax authorities within 15 days from the commencement of the taxable person’s economic activity. This form can be sent either in a physical format or digitally via the tax authorities’ website.
The application should be accompanied by several documents, such as:
- A duplicate of the company’s articles of incorporation,
- Copies of the Directors’ identity cards,
- A copy of a rental agreement or domiciliation contract, among other possible documents.
Economic activities include the following:
- Providing products or services.
- Intra-Community acquisitions.
- Imports made in the process of doing business.
Taxable persons include:
According to the VAT Law in Luxembourg, a taxable person is typically defined as any individual or entity that carries out economic activities on a regular and independent basis, regardless of whether or not they are registered for VAT.
Any individual involved in taxable economic operations in Luxembourg is required to register for VAT. The term “economic activity” encompasses activities carried out by manufacturers, traders, or service providers, including those in the mining and agricultural sectors, as well as professional occupations. Additionally, the following are considered “economic activities”:
- The sustained use of tangible or intangible assets for income generation.
- Any activity undertaken with the intention of generating income, irrespective of its objectives or results.
- Any continuous operation aimed at producing income.
Voluntary Registration
In Luxembourg, entities engaged in agricultural and forestry activities who are not required to register for VAT can choose to opt-in for VAT on a voluntary basis.
VAT Registration in Luxembourg
Exemptions from Registration
Individuals subject to taxation are typically exempted from VAT registration and filing requirements if they conduct no VAT-taxable activities in Luxembourg and have no permanent establishment in the country. Additionally, Luxembourg-based providers of VAT-exempt goods and services without the right to deduct VAT are also exempt from registration.
Furthermore, non-residents who lack a fixed establishment in Luxembourg and solely engage in transactions where the purchaser of goods or receiver of services is responsible for VAT payment via the reverse charge mechanism are also eligible for exemption.
Services associated with “honorary activities” that involve payment in the form of attendance fees are eligible for a VAT exemption under Article 44(1)(w) of the Luxembourg VAT Law, provided they performed the following:
- Members of public bodies.
- Groups and chambers of professionals.
- Boards, management committees, and other similar bodies.
Group and Divisional Registration
The EU VAT Directive, in Article 11, permits EU Member States to consider as a single taxable entity multiple legally independent persons who are closely interconnected through financial, economic, and organizational ties, but established within the same Member State.
In Luxembourg, grouping for VAT purposes is available but not mandatory. Eligible parties may choose not to participate in the group, as long as their activities are not located between the activities of two other members, and opting out does not generate a tax benefit for the individual or the group.
Registration, Non-established entities
If a non-established business, regardless of its location within or outside the EU, conducts taxable transactions in Luxembourg, including those related to immovable property, and Luxembourg is the place of supply, the business must register for VAT, provided that it is involved in transactions that do not qualify for the reverse charge mechanism.
Some examples of transactions that would require a non-established business, located either within or outside the EU, to register for VAT in Luxembourg include the following:
- Transactions that relate to immovable property.
- Supplies of goods that come with installation services.
- “Distance sales” into Luxembourg that exceed the prescribed threshold.
- Intra-Community acquisitions into Luxembourg that surpass the intra-Community acquisitions threshold.
- Provision of organization services for cultural, sporting, and similar events.
VAT Representative
VAT representation is exclusively permitted for transactions that involve the importation of goods by individuals or entities who have neither established nor registered for VAT in Luxembourg, as well as for the subsequent deliveries of such imported goods. Before the importation occurs, the VAT authority must authorize and appoint a VAT representative.
Distance Sales
Starting July 1st, 2021, non-Luxembourg European Union e-commerce sellers who ship products from within the EU are required to charge local Luxembourg VAT on all their sales. This applies to imported distance sales that do not exceed €150 and are subject to Luxembourg sales VAT. Sellers have the option to use the Import One-Stop Shop (IOSS) return system to comply with the VAT regulations.
Last updated: 07/12/2023
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
