VAT in Luxembourg: Rates, registration and obligations

The 4 Luxembourg VAT rates for 2026

Note: since 2024, the supply of electricity, natural gas and district heating benefits from a super-reduced rate of 3% for final consumers (measure made permanent for the energy transition).

Exemption threshold: €35,000 turnover

Companies whose annual turnover excluding tax does not exceed €35,000 (threshold raised in 2025 from the former cap of €30,000) benefit from the exemption regime: no VAT collected on sales, but also no deduction of VAT paid on purchases. This regime is an option, not an obligation: a freelancer can choose to opt for voluntary registration from the start if they wish to recover VAT on their investments. Once the threshold is exceeded during the year, registration becomes mandatory from the first day of the month following the excess.

VAT registration procedure

Registration is carried out with the AED (Luxembourg's Registration, Estates and VAT Administration) via the "Initial Declaration" form available on MyGuichet.lu. Processing time: 2 to 4 weeks, sometimes longer for cross-border files. After registration, the company receives:

• A national VAT number in the format LUXXXXXXXX
• An intra-EU number (LU + 8 digits) verifiable on VIES
• Assignment to a local VAT office (Luxembourg, Diekirch, Esch)
• The assigned filing frequency based on projected turnover

For a full step-by-step walkthrough, see Comment s'enregistrer à la TVA au Luxembourg.

Filing frequency

Three rhythms depending on annual turnover excluding VAT:

• Turnover > €620,000: monthly return, to be filed before the 15th of the second following month.
• Turnover between €112,000 and €620,000: quarterly return, to be filed before the 15th of the second month following the end of the quarter.
• <strong>Turnover < €112,000:</strong> annual return, to be filed before March 1 of the following year.

All taxable companies must also file an annual summary declaration before March 1, which consolidates the year's operations and may generate a balance to pay or to be refunded. Returns are filed exclusively via eTVA (the AED's paperless platform) or by XML import from accounting software.

Intra-EU B2B operations

Sales of goods or services to taxable businesses in another Member State benefit from the regime of exempt intra-EU supply, provided that:

• The customer's intra-EU VAT number is valid (VIES check mandatory and traceable).
• The goods actually leave Luxembourg territory (proof of transport: CMR, signed delivery note, etc.).
• The invoice mentions "Exempt intra-EU supply, Art. 43 VAT Law" and both VAT numbers.
• A recapitulative statement (intra-EU listing) is filed monthly or quarterly based on VAT frequency.

On the purchasing side, the reverse charge mechanism applies: the Luxembourg buyer calculates the Luxembourg VAT due on the good or service themselves, declares it as collected VAT and immediately deducts the same amount as deductible VAT. The operation is tax-neutral in cash flow but must appear correctly on the return.

B2C e-commerce and OSS / IOSS one-stop shops

Since July 1, 2021, distance sales to consumers (B2C) in the EU are subject to the VAT of the customer's country as soon as total B2C intra-EU turnover exceeds €10,000/year. To avoid registering in each Member State of consumption, Luxembourg offers the OSS (One-Stop Shop): the e-retailer declares all their EU B2C sales via a single quarterly return on eTVA and the AED remits to the other States. For imports of goods from a third country below €150, the IOSS (Import One-Stop Shop) avoids import VAT and simplifies customs clearance. Marketplaces (Amazon, eBay, AliExpress) are now deemed buyer-reseller for certain operations and collect VAT on behalf of third-party sellers.

Service territoriality: general rule and exceptions

VAT territoriality depends on the nature of the service and the customer's status:

• B2B (taxable customer): general principle, VAT at the customer's location (reverse charge on the customer side).
• B2C (individual customer): general principle, VAT at the supplier's location (Luxembourg 17%).
• B2C digital services in the EU: VAT of the customer's country, via OSS.
• Real estate services: VAT at the location of the property.
• Passenger transport: VAT at the place where transport is carried out.

Deductible VAT: rules and pitfalls

VAT paid on purchases is deductible provided that the goods or services are used for taxable operations. Watch out for exclusions and limitations:

• Passenger vehicles: deduction limited to 50%, except for commercial vehicles or vehicles used exclusively for a taxable activity (chauffeur service, driving school, rental).
• Entertainment expenses, client gifts, executive housing: non-deductible or partially.
• Non-compliant invoices: missing or incorrect VAT number, no date, no breakdown of net / VAT / gross: the administration can refuse the deduction.
• Mixed activities (taxable + exempt): application of a deduction prorata that must be calculated annually.

VAT credit refund

When deductible VAT exceeds collected VAT over a period, a VAT credit is formed. The company has two options: carry it forward to subsequent returns, or request a refund. The refund is automatic beyond €1,200 after the annual return, and on request during the year under certain conditions (new companies, major investments, export activities). Average refund time: 2 to 4 months after filing.

Invoicing obligations

Every invoice issued by a Luxembourg taxable company must include:

• Full name, address and VAT number of seller and buyer
• Unique sequential number, issue date and date of operation
• Description, quantity and net price
• VAT rate applied, VAT amount, total incl. VAT
• Special mention in case of exemption, reverse charge or special regime

Invoices must be kept for 10 years, whether paper or electronic. Since 2019, PEPPOL format invoices are mandatory for public procurement.

Penalties and late interest

• Late filing: flat fine of €250 per missing return, increased in case of repeat offence.
• Late interest on VAT due: 6% per year (2026 rate).
• Fraud or false declaration: surcharge up to 50%, criminal prosecution possible for serious cases.

Conclusion: an attractive but demanding VAT

The 17% rate and the quality of the paperless one-stop shops make Luxembourg VAT one of the most manageable in Europe. But the proliferation of special regimes (OSS, IOSS, reverse charge, prorata, distance sales) requires rigorous follow-up. An error in classification or a non-compliant invoice can cost twice the amount of VAT concerned in reassessment. Outsourcing to a digital firm or automating via AED-certified software remains the best way to secure compliance while preserving the benefit of the deduction.