Taxes

VAT in Luxembourg in 2025

Like many countries, Luxembourg has a VAT tax. Which VAT rules are there and to whom do they apply? For which products and services should VAT be included and are there products and services without VAT? Is it possible to reduce the rate? How do I file a declaration for a refund? The law will be updated on January 1, 2025.

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Anyone doing business in Luxembourg should be prepared to pay taxes. In this article, we will talk about one of the most well-known taxes, the VAT in Luxembourg, and who must pay it and when, the basic rates, and exceptions.

What is VAT in Luxembourg?

With its high level of economic development and favorable business climate, Luxembourg has long been a center for international business. As a member of the European Union, the Grand Duchy follows the EU VAT structure, which includes some common provisions and rules for all member states of the union. However, there are some unique aspects of VAT in Luxembourg.

What is the VAT rate in Luxembourg

VAT — Value Added Tax, an indirect tax levied on the additional value of a service or product that arises during its production or sale. The basic rate in Luxembourg is 17%.

VAT: the most important source of taxes of the state budget

VAT allows to minimize the risks of tax evasion.
All legal entities or individuals who regularly and independently carry out transactions related to economic activity are obliged to pay VAT. VAT is paid regardless of the purposes and results of this activity. The scope of application of VAT includes the supply of goods and services within the country, intra-Community acquisition of goods, import of goods from countries that are not members of the EU.
Persons subject to VAT collect a tax from their customers proportional to the price of goods sold and/or services rendered.
Persons who purchase goods or services for use not related to entrepreneurial activity are not VAT taxpayers. In most cases, these include private individuals.

Recent updates on VAT in Luxembourg

On 26 June 2024, the Luxembourg Government approved the VAT bill number 8406. It will implement some changes to the Luxembourg VAT rules. It introduces important changes concerning small companies, virtual events and the art sector. The bill will enter into force on 1 January 2025.

Special VAT scheme for small enterprises

Before the bill was passed, small businesses with an annual turnover excluding tax of no more than €35,000 were exempt from VAT. From 1 January 2025, the threshold will be raised to €50,000. The bill allows companies to remain in the tax-exempt regime if the threshold is exceeded by no more than 10%

In addition, small businesses will now be exempt from paying VAT when carrying out cross-border activities, provided that these activities are carried out in EU Member States and the taxpayer's turnover does not exceed €100,000.

New taxation scheme for work of arts, second-hand goods, collectors’ items, and antiques.

The new bill introduces an 8% rate on all sales of art objects without exception, including sales within the EU. Previously, a margin taxation scheme was applied for work of arts, second-hand goods, collectors’ items, and antiques. Only original creators or their legal successors could pay VAT at a reduced rate.

Change in VAT rules for virtual events

From January 1, 2025, virtual events will be taxed at the recipient's location. Before that, the service was taxed at the place of its physical provision

Exemptions and special cases on VAT

VAT is a mandatory tax for everyone who is engaged in economic activity, however, there are some exceptions that allow you not to pay the tax.

Which companies have to pay VAT mandatory

Small businesses

Small companies whose main activity is carried out in Luxembourg and whose annual turnover does not exceed a certain threshold (EUR 35,000 until 1 January 2025 and EUR 50,000 from 1 January 2025) can opt for the national VAT exemption regime. This regime exempts sales of goods on the domestic market from VAT, but excludes the possibility of refunding the tax paid on purchases. The taxpayer is required to include a special note on their invoices: “VAT not applicable – Article 57bis of the amended law of February 12, 1979”.

Agricultural and forestry enterprises

Farmers and other companies operating in these sectors of the economy pay tax at a special flat rate.

VAT group

Legal entities established in Luxembourg and having close financial, organisational and economic ties may, at their own discretion, create a VAT group Luxembourg and be treated as a single taxpayer. In this case, all supplies, services and transactions between members of the group are not subject to VAT. One legal entity can be a member of only one VAT group.In addition, companies operating in the field of medical and dental services, postal services, education, financial and insurance companies, companies that provide cultural services or hold sports events have the benefit of VAT exemption in Luxembourg.

VAT rates in Luxembourg in 2025

In addition to the basic rate of 17%, Luxembourg currently applies 3 other types of reduced rates.

The table shows the common rates for VAT in Luxembourg

Name	Rate
Standard rate except for the operations specified below	17%
Intermediate rate: certain types of wine, certain types of fuel and energy, advertising brochures, management and custody of credit guarantees	14%
First reduced rate: certain types of energy (gas and electricity), plants, bicycle, shoe and leather goods repair services, cleaning and hairdressing services	8%
Second reduced rate: food products, books, magazines and newspapers, pharmaceuticals, children's clothing and footwear, restaurant services, passenger transport services, cultural events.	3%

At the moment, the standard VAT rate in Luxembourg is the lowest in Europe. To compare, In France the rate is 20%, while in Germany the rate is 19%

Luxembourg

VAT

Overview

Overview of VAT in Luxembourg

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Application of VAT in Luxembourg in 2025

To be able to use the system a company has to get a VAT registration in Luxembourg. VAT returns are submitted in Luxembourg periodically: monthly and at the end of the year if the net turnover is 620,000 euros, quarterly and at the end of the year if the annual turnover is more than 112,000 and annually if the annual turnover is less than 112,000 euros.

Those who pay VAT for the first time, within 15 days from the date of commencement of activity, must submit an initial declaration or a declaration of option to the Advanced de l'enregistrement, des domaines et de la TVA – AED to register as a VAT payer. This can be done online using MyGuichet.lu. This is necessary in order to be able to collect VAT from your clients.
Required documents
For legal persons or companies:
- a duplicate of the constitutional documents either in French or German;
- a copy of passport/the identity card of the partners mentioned in the constitutional documents of the company and/or the business managers/directors.
For natural persons:
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;
- 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 à venir" (publication will follow);
- names and addresses of named partners listed in the constitutional documents and/or business managers/directors of the company.
For a natural person:
- surnames and first names of the taxable person;
- civil status;
- type and place of activity;
- complete private contact details;
- a bank account or a postal checking account (CCP) number at a Luxembourg or foreign bank (IBAN + BIC).
In addition, you need to specify:
- date of the start of the activity, 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 the anticipated annual turnover excl. Tax.
Obtain an 8-digit VAT identification number. This number is used for intra-Community trading. Submit declaration electronically in accordance with the deadlines. To get a Luxemburg VAT number, you need to register on the eCDF platform.
The declaration must be accompanied by summary reports on goods or summary reports on services rendered. The summary report contains:
- the country code and VAT number of:
- the customer purchasing the goods or the recipient of the goods in the context of a trilateral transaction; or
- the recipient of the services;
- the total sales value in euros of goods supplied or services rendered to the same customer within the EU;
- corrections to the data provided in the previous summary reports.
Pay the tax by bank transfer to the Recette Centrale account:
- IBAN LU35 0019 5655 0668 3000
- BIC: BCEELULL

When to submit a declaration

Declarations must be submitted by the 15th day of the month following the declaration period. For taxpayers who submit only an annual declaration, the deadline is 1 March of the following year.

Taxpayers who are exempt from VAT must submit their turnover in writing to The Registration Duties, Estates and VAT Authority by 1 March. The deadline for paying the tax coincides with the deadline for submitting declarations. In case the VAT declarations shows a negative amount, the person or company is eligible for a VAT refund. Luxembourg will pay the amount to the account connected to the VAT registration number.

In order to avoid making mistakes when paying taxes, it is necessary to be well versed in the legislation, rates, exceptions to the rules and to understand your own situation perfectly.