Tax Connected S.À R.L
Tax Connected has been incorporated in Luxembourg in 2010 by Thierry Derochette, former consultant with PWC. Thierry is active in the VAT sector in Luxembourg since 1994. He is actually involved in different training sessions in Luxembourg, Belgium and France. In 2014, Laurent Carnol joined the firm as partner. Laurent has a strong experience in corporate tax structuring.
The VAT system as it currently is in Luxembourg has been implemented in 1979. General rules and regulations are developed in the Luxembourg VAT Code, the Grand-Ducal Decrees, the administrative circulars and some other kind of official documents being the base of the Luxembourg VAT legislation.
Any taxable person performing taxable transactions or falling under the scope of the distance sales legislation is liable for a VAT Registration in Luxembourg.
Specific registration rules apply to foreign or “non-established businesses.” A non-established business performing supplies of goods or services in Luxembourg must register for VAT purposes in one or more of the following situations:
- Taxable transactions in Luxembourg for which it is liable to pay the Luxembourg VAT due
- Intra-Community acquisitions of goods in Luxembourg
- Intra-Community supplies of goods from Luxembourg
- Imports of goods, followed by the supply of the same goods
- Certain transactions in connection with a VAT warehouse
The way how the VAT Registration need to applies (directly, via mandate or via appointment of a fiscal representative) is directly described in the law and in Grand-Ducal Decrees.
In Luxembourg, the representation by a mandate or a tax representative is limited only to imports by non-established business.
Except for general reverse charge transactions (Intra-Community acquisitions, B2B services and imports), the liable to declare and pay the VAT is often the supplier.
The rules related to the filling of VAT returns and VAT audits are foreseen in the law and in some administrative notes accompanying the law. There are few detailed rules controlling the recording and processing of Luxembourg transactions and few administrative notes but precisions are done by Grand-Ducal Decrees.
Luxembourg adopted SAF-T (Standard Audit File for Tax). Upon request of the VAT authorities, taxable persons have the obligation to provide a structured electronic file. Small taxable persons are exempted from this obligation.
The standard VAT rate in Luxembourg is 17%. There are reduced rates of 14%, 8% and 3%.
Luxembourg VAT returns are legally submitted for monthly periods.
Taxable persons with an annual turnover of less than EUR 620,000 may submit returns quarterly (the threshold is extended to IC supplies and acquisition).
Taxable persons with an annual turnover of less than EUR 112,000 may submit returns yearly (the threshold is extended to IC supplies and acquisition).
The periodicity is fixed for the whole year and is confirmed each year by the VAT Authorities.
Taxable persons that file quarterly returns have not to prepay the VAT monthly. But taxable persons liable to one single annual VAT return may have to pay an advance fixed by the VAT Authorities upon request.
Return liabilities must be paid in euros.
Monthly VAT returns and payment are due the 15th day of the month following the return period. However, if that date falls on a Saturday, Sunday or public holiday, the due date will be postponed to the next working day. The payment of the VAT due needs to be made by the same date.
Quarterly VAT returns must be filed by the 15th day following the relevant calendar quarter. However, if that date falls on a Saturday, Sunday or public holiday, the due date will be postponed to the next working day. The payment of the VAT due needs to be made by the same date.
The balancing payment is due with the VAT return.
The annual VAT return is to be submitted before 1st May of the following year when the taxable person is liable to submit monthly or quarterly returns. In case, he has only to fill one annual return, this last has to be filled at the latest before 1st March of the following year.
All periodical returns have to be filled electronically, as well as the recapitulative annual return. Single annual return can be filled on paper.
Intrastat. A Luxembourg taxable person that trades with other EU countries must complete statistical reports, known as Intrastat if the value of either its sales or purchases of goods exceeds certain thresholds. Separate reports are required for intra-Community acquisitions (Intrastat Arrivals) and for intra-Community supplies (Intrastat Dispatches).
The threshold for Intrastat Arrivals for the 2015 calendar year is EUR 200,000.
The threshold for Intrastat Dispatches for the 2015 calendar year is EUR 150,000.
Luxembourg taxable persons must complete Intrastat declarations in euros, rounded up to the nearest whole number.
The Intrastat return period is monthly. The submission deadline is different than for the VAT return, which is
- the 6th day of the month following the return period if sent by paper,
- the 16th day of the month following the return period if sent electronically,
A penalty, varying from EUR 251 to EUR 2,500, can be imposed if a person does not comply with the imposed obligations. No distinction is made according to the nature of the offense (e.g., late submission, missing or inaccurate declarations).
EU Sales Lists. If a Luxembourg taxable person makes intra-Community supplies in a return period, it must submit an EU Sales List (ESL) to the Luxembourg VAT authorities. An ESL is not required for a period in which the taxable person has not made any intra-Community supplies.
Different forms exist for services and goods.
Effective from 1 January 2010, ESLs (for services) are usually filed monthly by monthly VAT filers and quarterly by quarterly VAT filers but the taxable person can choose the periodicity.
Luxembourg refunds VAT incurred by businesses that are neither established in Luxembourg nor required to be registered for VAT there. A non-established business is allowed to claim Luxembourg VAT to the same extent as a VAT-registered business.
For businesses established in the EU, refund is made under the terms of the EU 8th Directive. For businesses established outside the EU, refund is made under the terms of the EU 13th Directive. Luxembourg does not exclude any non-EU country from the refund scheme.
For Luxembourg based business, a special VAT refund process is in force since 1st January 2015.