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VAT registration in Luxembourg

VAT Registration in Luxembourg

Updated on Monday 26th September 2016

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Both companies and individuals are subject to VAT registration in Luxembourg provided that they undertake an economic activity. Foreign investors seeking to open companies in Luxembourg must know that VAT registration is an essential step of the company formation process. In 2015, Luxembourg has also brought several changes to the VAT rates. The standard rate is now 17%, while the reduced rates are 14% for several financial services, and 12% for the supply of electricity and gas.

Our law firm in Luxembourg can assist foreign enterprisers to set up companies here.

Who is required to register for VAT in Luxembourg?

In Luxembourg, the registration for VAT is mandatory for the following entities:

  • -          anyone established in Luxembourg who starts a taxable activity and assumes that its annual turnover will exceed 25,000 EUR annually;
  • -          any entity which is not established or domiciled in Luxembourg, but who performs transactions subject to the Luxembourg VAT, such as occasional services and temporary provision of services related to real estate located in Luxembourg and delivery of goods with installation or assembly in Luxembourg, for which it is liable for the tax;
  • -          any individual or corporate body established in Luxembourg which performs operations which are not qualified for a deduction and the activity is carried out by a taxable person established abroad services for which the customer is liable for the tax;
  • -          any legal entity who makes intra-Community acquisitions of goods, for an annual fee out of more than 10,000 EUR;
  • -          any entity established in Luxembourg which performs operations that do not qualify for deduction and which performs taxable services on the territory of another Member State for which the lessee is a liable tax;
  • -          any person established in Luxembourg, subject to lump-sum taxation and who performs activities in the agricultural and forestry fields and makes deliveries of alcoholic beverages or wood for an annual amount in excess of 10,000 EUR;
  • -          any person established and registered for VAT in another Member State of the European Union who performs activities in Luxembourg to an annual amount in excess of 100,000 euros.
  • Several exceptions apply to companies and individuals, such as:
  • -           individuals or corporate bodies on an occasional delivery of a new means of transport;
  • -           individuals or corporate bodies with no permanent establishment in Luxembourg and who operate exclusively abroad;
  • -          legal entities with no permanent establishment in the country and who do not realize imports of goods;
  • -          entities with no permanent establishment in the country which carry out taxable transactions for which the purchaser is liable for VAT.

 

Our attorneys in Luxembourg can offer more information on companies exempt from registering for VAT in this country.

What is the timeframe necessary for registration for VAT in Luxembourg?

The registration for VAT must be made within 15 days after the commencement of the activity for the taxable persons who are not exempt from registration or before the first day of the month following that in which the threshold is exceeded.

For the entities which are not subject to VAT but are willing to register the process must be made prior to the completion of the following:

  • -          implementation of services in the territory of another Member State for which only the lessee is liable for the tax;
  • -          acquisitions of goods subject to Luxembourg VAT and receiving services providers established outside the Grand Duchy for which the lessee is liable to pay the VAT.

What is the procedure of VAT registration in Luxembourg?

Before registering for VAT, companies must have a bank account from a foreign or Luxembourg bank. In order to register for VAT, the taxable person must submit a declaration to the competent tax office. For legal entities, the initial registration application must be accompanied by a copy of the incorporation documents in French or German and a copy of the identity card (or passport) of associates name in the constitution and / or managers, directors of the company.

Once registered for VAT, the applicant receives an identification number for VAT composed of a group of identical and unique 8 digits preceded by the letters "LU". The identification number for VAT purposes is used in intra-community operations.

VAT refunds in Luxembourg

In certain situations, the VAT can be refunded. These situations may appear if the legal entity is not eligible to pay VAT in Luxembourg or if it didn’t have its place of business in Luxembourg in the period of refund. The application for VAT refund must contain a minimum amount of 400 EUR for a period of minimum three months and not higher than one year or 50 EUR.

The companies from a non-EU country must submit the VAT refund application with the local tax office, but they may not file a claim with an amount lower than 250 EUR and for a period not equal to one year.

If received, the refund is paid no later than 10 days from the decision. For complete information, please contact our lawyers in Luxembourg.

 

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