Luxembourg VAT exemption threshold: the €50,000 rule

Luxembourg VAT exemption threshold: who qualifies and up to what turnover?

The Luxembourg VAT exemption threshold releases from charging the tax any taxable person established in the country whose annual turnover excluding VAT made within the country exceeded neither in the previous calendar year nor in the current one the national threshold of 50,000 euros. The scheme sits in article 57bis of the amended law of 12 February 1979.

The double condition is worth reading twice. The threshold is not tested on the year gone by alone: the current year counts just as much, which means the benefit of the scheme is lost mid-year, without waiting for the year-end close or for a decision from the authority. That is the whole difference between a threshold checked once a year and a threshold that runs continuously.

The national threshold was raised to 50,000 euros on 1 January 2025, with the entry into force of the new European scheme for small enterprises. It bears on turnover excluding VAT made within the country by a taxable person established in Luxembourg: a foreign company with no Luxembourg establishment falls outside the national exemption, though possibly within the cross-border scheme described below. How a business enters the VAT system is set out on our VAT registration page.

What happens when turnover goes past 50,000 euros?

Going past the Luxembourg exemption threshold does not produce the same effect depending on its size: as long as turnover stays under 55,000 euros, the exemption runs until 31 December; beyond that tolerated ceiling, it ceases from the day following the overrun.

The 10 % tolerance is a reprieve, not a higher threshold. A small enterprise that goes past 50,000 euros without reaching 55,000 finishes the year under the exemption, then leaves it: in the following calendar year it can no longer benefit from it, whatever the percentage of the overrun recorded. The reprieve exists to allow time to comply with the obligations of the normal regime, not to grant one more year.

Beyond 55,000 euros, the switch is immediate: the exemption ceases to apply from the day following the overrun, and supplies of goods and services made afterwards carry VAT. This is the scenario we see least well anticipated on assignments. The year-end invoice that breaches the ceiling is issued without tax, then corrected under pressure, when a month-by-month running total would have flagged it several weeks earlier.

What invoices must an exempt taxable person issue?

A taxable person under the Luxembourg exemption invoices without tax, may use a simplified invoice, and must carry on every invoice for a supply taxable in Luxembourg the wording « VAT not applicable – Article 57bis of the amended law of 12 February 1979 ».

That wording is not decorative. It is what allows the client, their accountant and an inspector to understand why a Luxembourg invoice carries no tax, and to tell the exemption apart from a zero-rating, a reverse charge or a plain omission. An invoice that says nothing about why VAT is absent will be sent back by an attentive client, or worse, booked wrongly by a distracted one.

The relief bears on the formalities of the invoice, not on the duty to invoice. The particulars drawn from company law — name, registered office, trade register number — belong to a different body of rules from VAT and are not swept away by the exemption. We set out those two sets of particulars, and the lighter set allowed under the exemption, in mandatory invoice details in Luxembourg.

Does the exemption remove every VAT return?

No: the Luxembourg exemption removes the periodic return for the transactions it covers, but it leaves standing the annual communication of turnover to the AED before 1 March, together with every obligation arising from cross-border transactions.

The 1 March communication is the only recurring deadline of a purely domestic exempt business. It bears on the turnover made in the calendar year just ended and it is addressed to the Registration Duties, Estates and VAT Authority. It is no archiving formality: that figure is what the authority uses to establish whether the threshold was crossed.

Cross-border transactions, by contrast, reopen the full file. An exempt taxable person supplying intra-Community services, or becoming liable for the tax in Luxembourg under article 61 of the VAT law, files a simplified annual return before 1 March of the following calendar year through the eCDF portal, together with the recapitulative statements for those services. The underlying mechanism is the one described in our article on the VAT reverse charge.

Purchases of goods in another Member State follow their own rule. Intra-Community acquisitions made by an exempt taxable person, other than new means of transport and products subject to excise duty, are not subject to the tax as long as their total amount excluding VAT has not exceeded 10,000 euros in the previous or the current calendar year. Above that, they become taxable in Luxembourg, and that single flow is enough to bring the business into the filing circuit.

How is the exemption claimed, and how is it given up?

The Luxembourg VAT exemption is claimed in the initial declaration filed with the AED when the activity starts; giving it up is a request to the tax office, and the option for the normal regime takes effect on the first day of the following month.

Registration is not optional because the scheme is. A taxable person not exempted from registration files the initial declaration within fifteen days of starting the activity, and it is in that document that the exemption is claimed. The scheme is therefore chosen at the very moment the business makes itself known to the authority, not once the first invoice has gone out.

Giving up the exemption is useful more often than supposed, and it leaves an accounting trace that has to be handled. Where, in the same calendar year, a taxable person has been under the exemption and then under the normal regime, the turnover made under the exemption is reported in box 481 of the VAT return filed under the normal regime. It is a box we regularly find left empty when taking over a file, although it is the only filed trace of the exempt period.

How does the cross-border exemption scheme work?

The cross-border exemption scheme lets a small enterprise established in Luxembourg apply the exemption in another Member State, after notifying the AED through MyGuichet.lu, provided its turnover across the Union stays below 100,000 euros.

Two thresholds stack, and the second is often forgotten. The Union threshold, set at 100,000 euros excluding VAT across all Member States, must have been exceeded neither in the previous calendar year nor in the current one. To it is added the national threshold of the Member State in which the business intends to benefit from the exemption, which is not the Luxembourg one and varies from country to country.

After notification, the business receives an individual identification number carrying the « EX » suffix. That number is not checked in the VIES, whose purpose is a different one, which regularly puzzles clients trying to validate a supplier before paying: we flagged it in our article on checking an EU VAT number in the VIES.

Monitoring is then quarterly. For each calendar quarter, the holder of the EX number declares to the AED the turnover made in each Member State, Luxembourg included, within one month of the end of the quarter, through its certified professional space on MyGuichet.lu. Where the total annual turnover declared at Union level exceeds 100,000 euros, the AED informs the business that its identification number is being deactivated.

Is the exemption always an advantage?

No: the Luxembourg VAT exemption excludes the right of deduction, so an exempt taxable person recovers neither the tax invoiced by its suppliers nor the tax for which it becomes liable on its purchases, and that tax stays in its cost base. That is the price of the scheme, and it is not negotiable.

The trade-off turns on two variables. The first is the client profile: facing taxable clients who deduct the tax, invoicing with VAT costs them nothing and opens up input deduction; facing private individuals, the exemption delivers a genuine price advantage. The second is the level of investment: an activity starting with significant equipment purchases leaves, under the exemption, an input tax permanently lost.

We see this calculation made too late, often at the time of the first annual return. The scheme is not judged on the administrative simplicity of its first year, but on the three-year turnover trajectory and on the investment calendar. Where crossing the threshold is foreseeable, giving up the exemption from the outset avoids a change of regime mid-year, which is always heavier to handle than the normal regime itself.

Sources and verification

Written for Financial Services Luxembourg and reviewed before publication by Mickaël LOC, licensed accountant (authorisation 10077274). The thresholds, deadlines, invoice wording and filing obligations cited were verified on 16 September 2026 against the official sources listed below.

On the side of the indirect tax portal of the Registration Duties, Estates and VAT Authority: the page on the new exemption scheme for small enterprises, for the national threshold of 50,000 euros applicable since 1 January 2025, the 10 % tolerance bringing the ceiling to 55,000 euros, the exemption ceasing on the day following an overrun greater than that tolerance, the ability to issue simplified invoices, the wording « VAT not applicable – Article 57bis of the amended law of 12 February 1979 » and the communication of turnover to the authority before 1 March; the page on economic activity under the exemption, for the double condition bearing on the previous and the current calendar year, for the exclusion from the right to deduct the tax invoiced by other taxable persons and for the simplified annual return filed through eCDF by an exempt business supplying intra-Community services or becoming liable under article 61; the page on intra-Community acquisitions of goods, for the 10,000 euro threshold and the exclusion of new means of transport and of products subject to excise duty. On the guichet.public.lu side: the page on the cross-border exemption scheme, for the prior notification to the authority, the identification number carrying the « EX » suffix, the Union threshold of 100,000 euros, the quarterly declaration per Member State filed within one month of the end of the quarter through the certified professional space on MyGuichet.lu, and the deactivation of the number above the threshold; the page on VAT registration, for the initial declaration within fifteen days of the start of the activity, for the exemption being claimed in that declaration and for the waiver taking effect on the first day of the following month. Box 481 and article 61 of the amended law of 12 February 1979 are cited from those same pages.

Four limits must be flagged. The primary texts were not read at source: the PDF files on pfi.public.lu and the legilux.public.lu portal are unreachable from our drafting environment, and those sources were consulted through indexed extracts; the exact paragraph numbering of article 57bis is therefore not cited. The national threshold applicable before 1 January 2025 was not confirmed and is deliberately not stated here. The list of transactions excluded from the turnover used to test the 50,000 euro threshold could not be established on an official source; turnover including property or financial transactions must be analysed case by case before concluding. Lastly, the national threshold applicable in each other Member State is not reproduced here: it is to be checked with the authority of the State concerned. Readers can confirm these points on pfi.public.lu, on guichet.public.lu and on legilux.public.lu.

This article states the law as it stands at the date of publication. Thresholds, deadlines and filing obligations change, and any decision binding your structure must be checked on the date you rely on it. Report an error to contact@financialservices.lu: the correction is dated in the article.