VAT registration in Luxembourg: number, thresholds and schemes.

Who must register for VAT in Luxembourg?

Any person, individual or legal entity, that independently and on a habitual basis carries out taxable supplies of goods or services in Luxembourg is in principle a taxable person and must register with the AED. The decisive test is neither legal form nor size: it is the independent pursuit of an economic activity. A SARL, an SA, an operating SOPARFI, a self-employed professional or a foreign company carrying out operations located in Luxembourg all fall under the same rule.

Registration is not optional and it sits inside a short window: the initial declaration must be filed within 15 days of the activity starting. That deadline is one of the most common traps for founders, who wait for their first invoice before thinking about it. The activity in fact begins well before the first sale, from the first preparatory acts committed in the company's name.

The only real judgement call concerns the scheme. Below EUR 50,000 of annual turnover excluding tax, the small-business exemption removes the obligation to charge VAT, at the cost of the right of deduction. Above that, or by option, the normal scheme applies. We establish your status as a taxable person, the scheme best suited to your model and the exact date the obligation arises.

How to obtain a VAT number?

The VAT number is obtained by filing an initial declaration with the competent AED tax office, through MyGuichet.lu or by post using the official forms. The declaration sets out the company, its object, its expected flows and its estimated turnover, because those elements alone determine the scheme and the filing frequency you will be assigned. A file completed casually is paid for later in corrections.

The number allocated takes the form LU followed by eight digits. For operations within the European Union, that number also serves as the intra-community VAT number and becomes verifiable in the VIES database. In practice allow two to four weeks between filing and allocation, without that period amounting to a rule: it depends on how complete the file is and on the office's workload.

This two-to-four-week window has an operational consequence many directors discover too late. Until the number is allocated, you can neither validly invoice with VAT nor apply the reverse charge on your intra-community purchases. Anticipating registration at the point of company formation, rather than after it, avoids an invoicing gap at launch.

Which rate applies from your first invoice

Four rates coexist in Luxembourg: a standard rate of 17%, an intermediate rate of 14%, a reduced rate of 8% and a super-reduced rate of 3%. The 17% rate is the lowest in the European Union and applies by default to any operation the law does not place elsewhere. The other three are reserved for the categories exhaustively listed in annexes A, B and C to the amended law of 12 February 1979.

At registration, the point is not to master every annex but to fix the right rate for your catalogue before the first invoice goes out. A rate error made at the outset replicates mechanically on every sale and is often discovered only at the first audit, when the assessment covers several financial years. We qualify your operations once, properly, and configure your invoicing accordingly.

The full treatment of rates, of their boundaries and of the checks to run before filing belongs to your VAT returns, where it is developed in detail. At this stage, what matters is that the rate depends on the exact nature of the good or service and on the place of supply, two parameters that registration fixes for what follows.

Exemption or normal scheme: the EUR 50,000 threshold since 2025

Since 1 January 2025 the national small-business exemption threshold has been EUR 50,000 of annual turnover excluding tax, against EUR 35,000 previously. That increase, carried by article 57bis of the amended law of 12 February 1979, moves a large number of self-employed professionals and very small structures from the normal scheme into the exemption. Many online sources still quote the old threshold: always check the date of what you are reading.

The exemption removes the obligation to charge VAT and cuts the administrative load sharply. Its counterpart is clear: no VAT is deductible on your purchases. The calculation is therefore economic before it is administrative. A services activity sold to private customers, with few taxed purchases, gains from it. An activity that invests heavily, or that sells to taxable persons for whom VAT is neutral, loses money under the exemption and has an interest in waiving it.

Crossing the threshold follows a tolerance rule that is rarely explained. If the overrun stays at or below 10%, that is EUR 55,000, you keep the benefit of the exemption until the end of the current calendar year and only move across from the following year. Above EUR 55,000, the exit is immediate. That EUR 5,000 margin is precisely what separates managed growth from a retroactive correction.

We track your turnover against both limits and trigger the move to the normal scheme at the right moment, with the invoicing change and the right of deduction that come with it. The bad scenario is never the overrun itself: it is the overrun noticed after the fact, when VAT not charged to private customers stays permanently on your books.

The cross-border exemption and the EX-suffix number

Until 2024, a small Luxembourg business selling into another Member State lost the benefit of the exemption from the first euro earned abroad and had to register locally. Since 2025 the cross-border exemption scheme corrects that asymmetry: a business established in Luxembourg can apply the exemption in the other Member States where it operates, without opening a registration there.

The scheme rests on a double ceiling. You must respect the national threshold of the destination State and, at the same time, a Union threshold of EUR 100,000 of annual turnover across all Member States. Breaching the Union threshold ends the scheme, without the 10% tolerance that applies to the Luxembourg national threshold.

A registered business receives an individual identification number carrying the EX suffix, in the form LU12345678-EX, distinct from its ordinary VAT number. In return it files a quarterly turnover declaration within one month of the end of the calendar quarter, that is by 30 April, 31 July, 31 October and 31 January at the latest. That quarterly obligation stands even when turnover for the quarter is nil.

This scheme and the national exemption share a name and are easily confused, although they answer two distinct logics and stack. We check your eligibility for both, handle the registration and take on the quarterly rhythm, which is the most common breaking point for businesses that register on their own.

Intra-community VAT number: when you need it, how to check it

As soon as you sell to or buy from a taxable person established in another Member State, your Luxembourg number must be active in VIES, the European VAT number verification system. It is that activation, not the existence of the number, that conditions the exemption of your intra-community supplies and the reverse charge on your acquisitions.

The symmetrical check matters just as much. Before exempting a supply, you must verify the validity of your customer's number in VIES and keep evidence of that check. A number invalid on the day of the operation, even supplied in good faith, puts the VAT back on your books. The check takes seconds and forms the first document in your file if the authority asks questions.

Some flows force a registration even below national thresholds, for example intra-community acquisitions above a ceiling, or services received from a foreign provider and taxable in Luxembourg in the hands of the recipient. A business under the exemption may therefore need an intra-community number without leaving the exemption on its domestic market.

The treatment of the flows themselves, recapitulative statements and the mechanics of the reverse charge are developed on the page devoted to VAT returns. Here the point is limited to the number: obtaining it, activating it and checking it.

Which filing frequency follows from your registration

Filing frequency is not a choice: it follows from your annual turnover excluding tax and is assigned to you at registration, on the basis of the estimate you enter in the initial declaration. Up to EUR 112,000 you file only an annual return, due before 1 March of the following year. Between EUR 112,000.01 and EUR 620,000 you move to quarterly filing, due before the 15th of the following quarter. Above EUR 620,000, returns become monthly, due before the 15th of the following month.

In the last two cases an annual recapitulative return is added to the periodic returns and must be filed before 1 May of the following year. That return consolidates the financial year and allows the AED to reconcile your statements against your actual activity.

The turnover estimate entered in the registration file therefore has lasting consequences for your administrative load and your cash position. Monthly filing smooths the outflow but imposes monthly collection discipline; annual filing lightens the cadence but concentrates the amounts on a single due date. Understating turnover to secure a comfortable rhythm produces a change of scheme along the way, never an advantage.

Preparing, computing and filing these returns through eCDF is covered on the VAT returns in Luxembourg page. We monitor threshold crossings so that any change of frequency is anticipated rather than imposed.

The VAT group, or single taxable person (article 60ter)

The VAT group is the most useful and least understood Luxembourg feature for groups structured locally. Introduced at article 60ter of the amended law of 12 February 1979, it allows legal persons established in Luxembourg and closely linked to one another to opt to be treated as a single taxable person. Transactions internal to the group then fall outside the scope of VAT.

The effect is direct for structures whose activity is partly outside the right of deduction, typically banking, insurance and real-estate groups. A service recharged between two members of the group no longer generates irrecoverable VAT. For those profiles the VAT group is not an administrative simplification: it is a real, recurring saving.

Three links must coexist. The financial link rests on control relationships, for example a holding of at least 50% of the capital. The economic link supposes activities that are similar, complementary, or carried out for the needs of the other members. The organisational link supposes common management, activities organised in concert, or the power of control held by a single person. Joining stays optional, but it is not reversible at will: any participation runs for a minimum period of two calendar years.

The group appoints a representative, being the member that controls the others or, failing that, the one with the highest turnover. That member files the single return. The option takes effect on the first day of the month following the expiry of a fifteen-day period running from the day the notification is received. We test your perimeter for eligibility, quantify the gain before deciding, and handle the notification and the group's returns.

Cash-receipts taxation: paying VAT when you are paid

By default VAT becomes chargeable on invoicing. You therefore hand the AED a tax you have not yet collected, and you finance the State out of your own cash for the whole length of your payment terms. For a services business whose clients settle at sixty days, the carrying cost is far from theoretical.

Cash-receipts taxation reverses that logic: VAT becomes chargeable on collection. It is open on request to a taxable person whose annual turnover excluding tax is below EUR 500,000. That threshold covers the vast majority of self-employed professionals, young companies and Luxembourg services structures, almost none of which are aware of it.

The option changes neither your filing frequency, nor your rates, nor your formal obligations. It moves only the chargeable event, and with it the moment cash leaves. Its logical counterpart lies in symmetry: input VAT deduction follows the same collection rule, which makes the scheme less relevant for an activity that buys heavily on credit.

The right moment to request this scheme is at registration, because switching mid-life imposes transitional handling of invoices already issued. We model the effect on your cash cycle before opting, rather than adopting the scheme on principle.

Foreign company: when must you register for VAT in Luxembourg?

A company not established in Luxembourg can be liable for VAT there without having an office, an employee or a subsidiary. It is not physical presence that triggers the obligation, but the place of taxation of the operation. As soon as a supply of goods or services is located in Luxembourg by the European territoriality rules, the question of registration arises.

The most frequent situations are known: holding stock in Luxembourg and selling from it, carrying out construction work on property located on the territory, organising an event locally, or selling to Luxembourg consumers outside the scope of the OSS and IOSS single windows. Conversely, a B2B service supplied to a Luxembourg client most often falls under the recipient's reverse charge and imposes no registration on the foreign provider.

The judgement to make is not binary. Registering a foreign company in Luxembourg creates permanent filing obligations; not registering it when it should have been exposes it to an assessment with interest, on operations whose VAT was never charged to customers and therefore stays on its books. Qualifying the flows in advance always beats correcting them afterwards.

We analyse the territoriality of your operations before any step is taken, determine whether registration is required or avoidable, and handle the file with the AED where it is required. The arrangements for appointing a representative for a non-established taxable person are assessed case by case, according to the State of establishment and the nature of the flows.

Holdings and VAT: taxable, non-taxable or partly taxable

The question comes up on almost every Luxembourg structuring file and calls for a three-part answer. A holding that confines itself to holding participations and collecting dividends does not, on that basis alone, carry out an economic activity for VAT purposes. It is not a taxable person, charges no VAT and deducts none of the VAT on its costs.

The position changes as soon as the holding involves itself in managing its subsidiaries by charging them for services, typically management, administration or support services. Those services constitute an economic activity: the holding becomes a taxable person, must register and charges VAT to its subsidiaries, which deduct it where their own activity allows.

Between the two lies the most frequent and most delicate case: the mixed holding, which holds passive participations and also charges for services. Its right of deduction becomes partial and is determined by a pro rata, whose calculation method drives the amount recoverable on its overheads, acquisition fees and structural costs. On an acquisition file, the gap between two defensible methods runs into tens of thousands of euros.

The subject is settled at incorporation, not at the first audit. The way a SOPARFI or a holding company organises its internal flows determines its VAT status for its whole life. We qualify the status at formation, weigh the case for a VAT group where the perimeter lends itself to one, and document the pro rata adopted.

Ceasing activity: deregistering your VAT number

A VAT number does not lapse on its own. Until deregistration is recorded, the AED treats the taxable person as active and expects returns, including nil returns. Dormant or already dissolved companies thus keep accumulating filing defaults, with the corresponding interest and penalties, for an activity that stopped long ago.

The cessation declaration is transmitted to the AED through MyGuichet.lu, using a LuxTrust product, a Luxembourg electronic identity card or an eIDAS identification means from another European country. It sits within the wider cessation sequence, alongside deregistration from the RCS and formalities with the other authorities.

Cessation is not a simple closing letter. It requires filing the returns for the final period, adjusting VAT deducted on capital goods still held, clearing outstanding VAT credits and keeping records for the legal retention period. A deregistration requested before those adjustments is refused, or reopens the file later.

We run that exit in the right order, coordinating it with the closing of the annual accounts and, where applicable, with the liquidation of the company. That is the only way to close a file cleanly, without leaving a dormant filing obligation behind.