Tax, VAT & payroll in Luxembourg

Which tax step matches your situation?

You are starting and need a VAT number: VAT registration covers thresholds, deadlines and the exemption scheme. You are registered and file each period: VAT returns cover frequency, eCDF and deadlines. You employ staff: payroll handles payslips, CCSS and withholding tax. Your return shows a credit: VAT refund sets out the procedure by place of establishment. Your company is foreign and must register here: the VAT fiscal representative handles the LU number and the filings.

You want one contact for the whole: the tax advisor in Luxembourg takes on returns, positions and exchanges with the authorities; the corporate tax return details CIT, MBT and net wealth tax. Directors have their own route on the personal tax return. You have unfiled periods: the regularisation of late tax filings starts with an inventory of the open years.

What are the tax and VAT deadlines for a Luxembourg company?

The corporate tax return (form 500) is filed by 31 December of the year following the tax year, a rule in force since tax year 2022 (Direct Tax Administration, "Filing deadlines"). Advance payments of corporate income tax fall due on 10 March, 10 June, 10 September, 10 December; municipal business tax and net wealth tax advances on 10 February, 10 May, 10 August and 10 November.

The VAT return is filed by the 15th of the following month under the monthly regime, by the 15th of the month following the quarter under the quarterly regime, and the annual return by 1 May; below EUR 112,000 of turnover only an annual return is due, by 1 March (Guichet.lu, "VAT return"). The recapitulative statement of intra-Community transactions is filed by the 25th of the following month. VAT return frequency and quarterly tax advances are covered in two articles.

Payroll runs monthly: salary declarations to the CCSS and payment of wage withholding tax within 10 days after the reference period once monthly withholding reaches the monthly-filing threshold. The annual accounts, the starting point of the tax return, are approved within 6 months of year-end and filed with the RCS within one month of approval: see annual accounts.

What happens if a return is filed late?

For direct taxes, the tax office may set a tax supplement of up to 10% of the tax assessed, impose a penalty payment after formal notice and, where no return is filed, assess the tax ex officio on an estimated basis that is almost always unfavourable (ACD, "Additional levies for missed filing and payment deadlines"). The resulting assessment is challenged by a claim to the director of the ACD within 3 months of notification.

For VAT, the amended law of 12 February 1979 provides for a tax fine of EUR 250 to EUR 10,000 per infringement for a missing or late return, a fine of up to 10% per year on VAT paid late, and a fine of 10% to 50% of the VAT evaded where the breach was intended to avoid the tax (article 77). The AED may correct or assess ex officio, and the assessment is challenged within 3 months.

Two routes answer these situations: the regularisation of late tax filings, which rebuilds and files the missing periods before the authority assesses ex officio, and tax audit assistance, which prepares answers to information requests from the ACD or AED and claims within the deadlines.

How much does the tax hub cost?

A VAT return is billed EUR 220 excl. VAT under the monthly regime, EUR 230 excl. VAT quarterly and EUR 100 excl. VAT under the simplified annual regime; the annual recapitulative return is billed EUR 500 excl. VAT. The corporate tax return (500F) costs EUR 800 excl. VAT as a one-off; it is included in the company accounting retainer from EUR 250 excl. VAT per month. A personal tax return (form 100) starts at EUR 150 excl. VAT.

A VAT credit refund claim is billed from EUR 350 excl. VAT. Time outside the retainer, for a catch-up, an audit or a technical question, is billed EUR 150 excl. VAT per hour at senior level and EUR 250 excl. VAT per hour at partner level. Details are on the VAT return fees, payroll fees and accounting fees pages. Firm quote within 48 working hours after scoping.

Transfer pricing, IP box, intragroup financing: when do these levers apply?

These three topics only concern companies that transact with related entities or hold intellectual property. Transfer pricing documentation becomes necessary as soon as a Luxembourg company invoices, finances or is financed by a group company: the authority may ask for the arm's-length justification of the price. Intragroup financing adds the substance and margin requirements of circular L.I.R. n° 56/1 - 56bis/1.

The IP box regime of article 50ter LIR exempts 80% of eligible net income from patents and copyright-protected software, in proportion to the research expenditure actually incurred (nexus approach). It requires tracking expenditure per asset in the accounts from the first year. These levers are handled alongside routine filings, never instead of them.