Value Added Tax (VAT) is a tax on consumption. It is a tax on turnover that is levied on final consumption and is collected, at each stage of the economic operations, on the turnover of the various players involved.
It is levied on every operation resulting from an economic activity and based on the value added to the product.
'In principle' VAT is neutral and does not form part of the cost price: taxable persons first calculate the tax by applying the defined rate to their turnover (output tax); the amount obtained is then reduced by the amount of tax charged on the taxable person by his suppliers (input tax).
To register for VAT, the business (= taxable person) must submit an initial declaration to the Land Registration and Estates Department (Administration de l’enregistrement et des domaines - AED).
Carry out your procedure:
With an online service
- VAT - Initial declaration natural persons
- VAT - Initial declaration legal persons
- VAT - Initial declaration (ICA) natural persons
- VAT - Initial declaration (ICA) legal persons
- VAT - Declaration of option (ICA) natural persons
- VAT - Declaration of option (ICA) legal persons
By downloading a formVAT - Initial declaration natural personsVAT - Initial declaration legal personsVAT - Initial declaration (ICA) natural personsVAT - Initial declaration (ICA) legal personsVAT - Declaration of option (ICA) natural personsVAT - Declaration of option (ICA) legal persons
As a general rule, all persons subject to VAT must register for VAT.
VAT registration applies to anyone who independently and habitually carries out any form of economic activity, whatever the purpose or results of this activity and wherever it takes place.
The sense of 'taxable person' is broadened with regards to the geographical location of the provision of services, i.e.:
- a partially taxable person is still considered a taxable person for services purchased;
- a non-taxable legal person liable for VAT is considered a taxable person for services purchased.
This broadened sense of the notion of taxable person implies that the services provided to those two categories of service buyers are taxable in Luxembourg, as they are considered as taxable persons when they purchase services. It implies that they need to declare these services through the VAT reverse charge mechanism.
The following must register for VAT:
- any person established in Luxembourg who starts a taxable activity and expects annual turnover to exceed EUR 25,000;
- any person who is not established or domiciled in Luxembourg, but who carries out transactions subject to VAT in Luxembourg such as the occasional and temporary provision of services (including services related to buildings located in Luxembourg and the delivery of goods including their installation or assembly in Luxembourg which are subject to tax), whatever the turnover;
- any person who is taxable in principle but exempted from registration for VAT (see exceptions below), as well as any legal person not subject to VAT who carries out intra-Community acquisitions of goods, for an annual amount exceeding EUR 10,000;
- any taxable person, established in Luxembourg, who only carries out economic operations that do not give rise to a right of deduction and who purchases services from a taxable person established abroad, for which the service buyer is liable for tax;
- any taxable person, established in Luxembourg, who only carries out economic operations that do not give rise to a right of deduction and who provides taxable services, in another EU Member State, for which the service buyer is liable for the tax;
- any person established in Luxembourg, subject to the agricultural and forestry flat-rate taxation and who delivers alcoholic beverages or wood for an annual amount exceeding EUR 25,000;
- any person established and registered for VAT in another EU Member State who carries out deliveries of goods, including the dispatch or transport, to persons not registered for VAT and established or domiciled in Luxembourg, for an annual amount exceeding EUR 100,000. This category of delivery of goods is commonly referred to as 'distance sales'.
Exemption from registration
The following are exempt from registering for VAT:
- persons that occasionally deliver a new means of transport;
- taxable persons who:
- have no permanent establishment in the country and who carry out their business exclusively abroad;
- have no permanent establishment in the country, only import goods for which they are liable for VAT into the country and use the system of tax representation;
- have no permanent establishment in the country in which they only carry out taxable activities where the buyer or customer identified for VAT purposes is liable for VAT;
- carry out a professional activity in the country, but which is totally exempt and does not give rise to a deduction of the input tax (e.g. doctors and dental surgeons, hospital, schools and universities, etc.);
- benefit from the agricultural and forestry flat-rate taxation;
- benefit from a VAT exemption (exemption for small businesses).
The following may register for VAT:
- any person who wishes to renounce the exemption for deliveries and rentals of immovable property and to opt for the application of VAT on these economic operations;
- any person established in Luxembourg with an annual turnover before tax of less than EUR 25,000 who wishes to opt for the standard taxation regime;
- any person subject to VAT and who carries out a fully exempted activity which does not give right to an input tax deduction, or who falls under the tax exemption rule for small businesses or a flat-rate taxation regime, as well as any non-taxable legal person established in Luxembourg and who undertakes intra-Community acquisition of goods for an amount of less than EUR 10,000 but who chooses to opt for taxation of the goods in Luxembourg;
- any person established and registered for VAT in another EU Member State who carries out deliveries of goods, including the dispatch and transport, to persons not registered for VAT (distance sales) established or domiciled in Luxembourg, for an annual amount of less than EUR 100,000, and who wishes to charge Luxembourg VAT on these sales;
- any person established in Luxembourg, subject to the agricultural and forestry flat-rate taxation regime and who wishes to be subject to the standard taxation regime.
VAT registration must take place:
- within 15 days of the start of the activity for taxable persons that are not exempt from registration;
- before the first day of the month following the month where the tax exemption limit is exceeded (during the same calendar year);
for taxable persons exempt from registration and for legal persons not liable for VAT, before the following operations are carried out:
- provision of services in another EU Member State for which only the buyer is liable for VAT;
- intra-Community purchase of goods subject to VAT in Luxembourg;
- purchase of services from providers established outside Luxembourg and where the buyer is liable for VAT.
In order to register for VAT, the taxable person has to submit an initial declaration or a declaration of option corresponding to his situation to the competent tax office, namely:
- as regards mandatory registration:
- either an initial declaration for natural persons;
- or an initial declaration for legal persons;
- either an initial declaration (ICA) for natural persons (a taxable person in principle but who is exempted from registration for VAT and who carries out intra-Community acquisitions for an annual amount in excess of EUR 10,000);
- or an initial declaration (ICA) for legal persons (non taxable legal person who carries out intra-Community acquisitions for an annual amount in excess of EUR 10,000);
- if registration is optional:
These declarations can be completed online via MyGuichet or by post by sending in the relevant forms (see under "Forms / Online services" above).
Attention: taxable persons who carry out an economic activity in Luxembourg and whose registered office is outside of Luxembourg but within the European Union are registered with tax office Luxembourg 10 (bureau d'imposition Luxembourg 10).
Documents and information to be added to the application
For legal persons (companies), the initial declaration must be accompanied by:
- a copy of the constitutional documents in French or German;
- a copy of the identity card (or passport) of the partners appearing in the constitutional documents and/or the business managers/directors of the company.
For natural persons, the declaration must be accompanied by:
- a copy of the identity card/passport of the taxable person.
The information to be provided in the initial declaration includes:
- for a company:
- name of the company;
- legal form of the company;
- address of the registered office;
- date of the constitutional documents and, for Luxembourg companies, if available, the number of the official journal (Mémorial C) or of the electronic compendium of companies and associations (Recueil électronique des sociétés et associations - RESA) in which they were published, otherwise indicate "Publication to follow"
- names and addresses of named partners appearing in the constitutional documents and/or business managers/directors of the company;
- for a natural person:
- surnames and first names of the taxable person;
- marital status;
- type and place of activity;
- complete private contact details;
- a bank account or a direct deposit account (post office account - CCP) number at a Luxembourg or foreign bank (IBAN number + BIC code);
- date of the effective start-up of the business, which determines the first period for which a VAT declaration will have to be submitted;
- financial year;
- forecast or otherwise of intra-Community acquisitions and deliveries of goods or services.
- estimation of annual turnover before tax.
This estimation will be used as one of the elements for determining the periodicity of declarations:
Turnover < EUR 112,000
EUR 112,000 < Turnover < EUR 620,000
Turnover > EUR 620,000
Annual VAT declaration
Quarterly AND annual VAT declaration
Monthly AND annual VAT declaration
The competent tax office will rule on the application for registration. In addition to the information provided on the initial declaration, the administration may require other information or documents relating to the business activity of the person applying for registration or for a VAT number.
Receiving the VAT number
Once registered for VAT, the taxable person (or non-taxable legal person) receives a VAT identification number composed of a unique number with 8 digits preceded by the letters 'LU'.
The VAT identification number is used for intra-Community trade.
For communications with the Luxembourg Administration, the taxable person nevertheless uses his 11-figure national registration number assigned by:
- the Social Security Administration upon his first registration in Luxembourg (for natural persons);
- the State Information Technology Centre (Centre des Technologies de l'Information de l'Etat - CTIE) following the publication of the constitutional documents in the 'Mémorial C' or in the electronic compendium of companies and associations (for legal persons).