FAQ | VAT Solutions

What are the applicable VAT rates in Luxembourg ?

Standard VAT rate is 17%. It applies to all goods and services that don’t benefit from a reduced VAT rate.

Reduced VAT rate of 8% applies to : Some wines, advertising, print and commercial brochures, etc.

Intermediary VAT rate applies to : Electricity, gas, flowers, hairdressers, cleaning of private housing, importation of works of art, etc.

Super reduced VAT rate applies to : Books; foodstuffs including restaurants (but excluding alcoholic beverages); construction work on a new building to be used as a primary residence by the owner; beverages excluding alcohol; assigning water distribution; some pharmaceutical products; hotel; transport of passengers; access to concert and theatres; broadcasting and television services; clothes for children under 14 years; etc.

I incurred VAT costs on expenses. Can I recover VAT ?

If you are a private person, you are not entitled to recover VAT on your expenses unless you are resident out of the EU and you will transport the purchased goods out of the EU. More information here (in French).

If you are a professional, you are entitled to recover the VAT paid on your expenses provided that the following conditions are fulfilled:

The expense was incurred to carry out an economic activity that provides the right to deduct VAT (some activities do not provide the right to deduct VAT, e.g. financing activities, insurances, etc) ;

The expense itself allows the deduction of VAT. In Luxembourg, VAT paid on sumptuous expenses is not recoverable.

The right procedure for VAT recovery is used : VAT registration, 13^th Directive refund for non EU companies, or VAT MOSS refund (EU Mini One Stop Shop). In order to determine which procedure should be followed, all parameters of the given transaction should be taken into account.

What is the difference between a mixed and a partial taxable person ? What is their respective VAT recovery right ?

A mixed taxable person is involved in taxable transactions (i.e. within the scope of VAT) with and without deduction right. A partial taxable person is involved in both transactions within and outside the scope of VAT.

The VAT paid on expenses that relate to transactions :

falling out of the scope of VAT is not recoverable;
exempt without recovery right (e.g. financial activities, insurance etc as described by the article 44 of the Luxembourg VAT law) is not recoverable ;
taxable or exempt with recovery right (e.g. export or intracommunity deliveries of goods etc as described by the articles 43 and 60bis of the Luxembourg VAT law) is fully recoverable.

A deductible proportion shall be computed to determine the VAT recovery right for the expenses that cannot be allocated to a specific transactions or sector of activities.

VAT training “The essentials of Luxembourg VAT declarations for the financial sector” will be soon available.

Is fiscal representation available in Luxembourg ? How do I use a fiscal representative in Luxembourg?

You can use the services of a fiscal representative in Luxembourg to declare an importation of goods (i.e. from a non EU country) and the subsequent transactions (storage, local sales, intracommunity sales or exportation). Only logistics operators can act as fiscal representatives in Luxembourg. The fiscal representative represents your company in all dealings with the authorities and reports the transactions to the Luxembourg VAT authorities on your behalf. Instead of registering for VAT in Luxembourg, and getting your own VAT number, you will use the specific VAT number of your fiscal representative to manage your transactions. Your invoices must be issued in conformity with the requirements of the Luxembourg VAT law. As the fiscal representative is jointly liable for any VAT due that might be due on your transactions, you must carefully implement an appropriate working process with him. Contact us for more information or a specific question.

I will purchase Union goods from an EU supplier. Which formalities should I fulfil in Luxembourg ?

Assuming that you are a VAT registered person, you should provide your Luxembourg VAT number (LU + 8 digits) to your supplier. This will enable him to issue its invoice without VAT. Upon receipt of the goods and of the invoice, you should declare an intracommunity acquisition in your VAT declaration. If the yearly threshold (200.000 EUR) is exceeded, you should also file an INTRASTAT declaration. If the purchased goods are excise products (alcohol, tobaccos or energy products), additional excise formalities apply.

If you are a private person, your supplier should take care of all tax formalities and issue its invoice with VAT.

VAT training “The essentials of Luxembourg VAT and INTRASTAT declarations for the commercial sector” will be soon available.

I will sell Union goods to an EU client. Which formalities should I fulfil in Luxembourg ?

Assuming that you are a VAT registered person, you should check the VAT status of your client. If your client is a VAT registered person in another Member state, he should provide you with his VAT number and you should check the validity of the VAT number in the VIES database of the European Commission. If the VAT number is correct, and provided that the goods sold are effectively delivered to another Member State, you should issue your invoice without VAT mentioning “exempt intracommunity delivery – article 138.1. of the Directive 2006/112/EC”. You should report this sale in your Luxembourg VAT declaration and in an EC sales list. If the yearly threshold (150.000 EUR) is exceeded, you should also file an INTRASTAT declaration. If the concerned goods are excise products (alcohol, tobaccos or energy products), additional excise formalities apply. You should also keep formal proof that the goods have left Luxembourg (transport document).

VAT training “The essentials of Luxembourg VAT and INTRASTAT declarations for the commercial sector” will be soon available.

Which amount of duties and tax should I pay to import goods in Luxembourg ?

Importing goods necessarily means that the concerned goods are non Union goods, i.e. goods that have been produced or manufactured in a non EU country (or within the EU but exported to a non EU destination).

Union goods relate to goods that were produced in the EU and not exported, as well as non Union goods that were imported in the EU. Their delivery in Luxembourg triggers intracommunity VAT obligations, but no customs importation.

Different tax and duties apply on import of goods in Luxembourg :

Customs duties apply depending on the customs nomenclature of the goods. The European customs nomenclature (= combined nomenclature) is harmonized within the EU and is composed of the HS code (6 digits) + 2 additional digits. Anti dumping duties or import restriction might apply, depending on the TARIC code. The TARIC code is composed of the combined nomenclature code (8 digits) + 2 additional digits. You can access the TARIC database here
Customs duties might be reduced if the goods are eligible for a preferential origin agreement. You should check the conditions to fulfil, which depends on the country of origin of the goods. A list of preferential agreements and applicable conditions is available here
Import VAT is due, and the rate depends on the nature of the imported goods. Standard VAT rate is 17% – Reduced or super reduced VAT rates apply on certain goods, see the question hereafter for more information
Excise duties might also apply if the concerned goods are alcohol, tobaccos or energy products. If the consumption country is not Luxembourg, suspensive excise arrangements, subject to customs authorizations, can apply. More information about suspensive excise arrangements is available here. The applicable excise duties in Luxembourg are available here
The duties and taxes that are applicable in Luxembourg can be checked on the TARLUX database of the Luxembourg customs authorities here
If the goods will be reexported out of the EU, the use of a suspensive customs regime, subject to customs authorization, can be considered (customs warehousing to store the goods, inward processing relief to process the goods, temporary admission to use the goods, or transit to transport the goods).
Contact us for more information or for a specific question. Customs training “The essentials of import rules” will be soon available.