VAT in Luxembourg: rates, obligations and returns

VAT treatment depends on the activity, the place of supply and the applicable regime. Legal form — SARL, SA, SAS or sole trader — does not, by itself, determine taxable status, input-tax recovery or return frequency.

The standard rate is 17 %. Rates of 14 %, 8 % and 3 % apply to the goods and services identified by the law and its annexes. The correct rate must therefore be linked to the transaction actually carried out rather than inferred from a broad commercial category.

The four VAT rates in Luxembourg

Luxembourg applies four VAT rates, defined by the amended law of 12 February 1979:

Rate	Percentage	Examples
Standard	17 %	General goods and services, consulting, IT, retail
Intermediate	14 %	Securities management, wines and spirits, certain fuels, printed advertising
Reduced	8 %	Gas and electricity, hairdressing, clothing cleaning, certain cultural goods
Super-reduced	3 %	Food, books (print and digital), medicines, housing (construction and renovation), passenger transport

With a standard rate of 17 %, Luxembourg offers the lowest standard VAT rate in the EU, compared to 20 % in France, 21 % in Belgium and Germany (19 %).

Registration obligations

Who must register?

An independent economic activity requires a VAT-identification analysis before the relevant operations start. A Luxembourg-established business may, however, fall within the domestic small-enterprise exemption where the conditions are met and annual Luxembourg turnover does not exceed EUR 50,000. Covered transactions are exempt from VAT and do not give rise to input-tax recovery.

The intra-Community VAT number

Every taxable person registered for VAT receives a Luxembourg intra-Community VAT number (format: LU + 8 digits). This number must appear on all invoices, intra-Community returns and correspondence with the AED.

VAT return frequency and deadlines

Annual turnover (excl. VAT)	Frequency	Filing deadline
> €620,000	Monthly + annual	15th day of the following month; annual return before 1 May
> €112,000 and ≤ €620,000	Quarterly + annual	15th day of the following quarter; annual return before 1 May
≤ €112,000	Annual	1 March of the following year

The annual declaration is due before 1 March for annual-only taxpayers. Taxpayers filing monthly or quarterly returns also file an annual return before 1 May of the year following the tax year. All returns must be filed electronically via the eCDF platform of the Luxembourg tax administration, as paper returns are no longer accepted.

Input VAT deduction

Taxable persons may deduct input VAT on purchases used for their taxable activity. The right to deduction arises when the tax becomes chargeable and requires holding a compliant invoice.

A leased artwork requires the same review of its use for transactions carrying a right to deduct and of the statutory exclusions. The guide to art leasing in Luxembourg places that VAT analysis in its contractual, tax and accounting context.

Non-deductible items include: vehicle acquisition (except for certain professional uses), entertainment and reception expenses, housing provided free of charge to staff or managers, and goods and services used for exempt transactions.

For mixed activities (taxable and exempt), a pro-rata deduction applies based on the ratio of taxable turnover to total turnover.

Intra-Community and cross-border operations

Intra-Community supplies of goods (B2B)

Supplies between taxable persons in different EU Member States are exempt from Luxembourg VAT (0 % rate). The buyer self-assesses VAT in the destination country. Documentary proof required: transport documents, buyer’s valid intra-Community VAT number, EC Sales List (recapitulative statement).

B2B services

The general rule is that services are taxable where the customer is established (reverse charge mechanism). The Luxembourg provider invoices without VAT and the customer self-assesses.

Distance sales to consumers (B2C)

Since 1 July 2021, a €10,000 EU-wide threshold applies. Below this threshold, VAT of the supplier’s country applies. Above it, the One-Stop Shop (OSS) allows declaring and paying VAT in all EU Member States through a single portal.

Special VAT regimes

Regime	Conditions	Effect
Domestic small-enterprise exemption	Annual Luxembourg turnover ≤ EUR 50,000, subject to the statutory conditions	No VAT charged on covered transactions and no input VAT deduction
Margin scheme	Second-hand goods, works of art, antiques	VAT on the margin only (difference between sale and purchase price)
Reverse charge (construction)	Subcontracting in construction	Recipient accounts for both output and input VAT

Invoicing requirements

Every invoice must include: seller and buyer details with VAT numbers, sequential invoice number, date of issue, description of goods or services, taxable amount per rate, applicable VAT rate(s) and amount(s), and total including VAT. For exempt supplies, the legal basis for exemption must be stated.

Credit notes must reference the original invoice and clearly state the corrected amounts.

Tax fines, criminal sanctions and audits

Mechanism	Exact statutory category
Infringement of duties covered by Articles 62 to 66bis	Tax fine of EUR 250 to EUR 10,000 per infringement
Failure to pay within the statutory deadline	Separate tax fine capped at 10 % per year of the outstanding VAT
Infringement intended or resulting in VAT evasion	Tax fine of 10 % to 50 % of the evaded VAT or undue refund, subject to a EUR 125 minimum
Aggravated tax fraud	Subject to Article 80 thresholds and conditions, imprisonment and a criminal fine from EUR 25,000 up to six times the amount concerned
Tax evasion through fraudulent schemes	Subject to Article 80 conditions, imprisonment and a criminal fine from EUR 25,000 up to ten times the amount concerned

During a VAT review, the authorities may compare returns, invoices, bookkeeping and the evidence supporting cross-border treatment. Those records must reflect the same VAT qualification without prejudging the outcome of a review.

VAT in the accounting cycle

VAT compliance is not limited to sending a return before the deadline. The return must reconcile with the bookkeeping, the sales ledger, the purchase ledger, the bank flows and the evidence supporting cross-border treatment. A Luxembourg company selling services to another EU taxable person, buying services from abroad or carrying out intra-Community supplies needs documentation that explains why VAT was charged, reverse-charged or not charged.

VAT also interacts with the wider company cycle. A holding or SOPARFI that charges management fees to subsidiaries moves beyond the mere holding of its own participations and may enter a VAT-relevant service activity. The invoices and accounting records then follow the VAT qualification of those services.

Where the services are supplied to undertakings belonging to the same statutory group, Article 30 of the amended Law of 2 September 2011 removes the business-permit requirement. That exemption does not determine the VAT result. The corporate object, VAT treatment, transfer pricing and sector-specific rules remain separate analyses. Services outside the group remain subject to the ordinary business-permit analysis.