Input - March 2024

New developments regarding the VAT exemption for funds

On 14 March 2024, the advocate general of the Court of Justice of the European Union (CJEU) delivered conclusions that may suggest new developments regarding the VAT exemption for funds.

Input - February 2024

VAT status update for directors in Luxembourg: Retroactive VAT regularization

Since the decision was made in December 2023 that directors are not taxable for VAT, Luxembourg’s VAT authority has announced that “non-bureaucratic” procedures for retroactive VAT regularization will be made available on “My-Guichet.” They have also confirmed that, considering the timing of the ruling, the ability to retroactively regularize VAT should extend back to 2018, instead of 2019. However, as we await the civil tribunal’s final decision, many questions with significant implications remain unanswered.

Input - December 2023

A director is not a VAT taxable person

On 3 November 2023, the Luxembourg government submitted a draft bill to combat VAT fraud in certain domestic supplies of goods extremely sensitive to VAT fraud, such as laptops or mobile phones and raw or semi-finished metals. Under the bill, domestic supplies of such goods would be subject to the reverse charge rule. This rule implies that the payment of the VAT is shifted from the suppliers to their clients if the clients are VAT-registered, taxable persons and if the value of the supply exceeds €10,000 before VAT and without taking into account any subsequent reduction of the price of the transaction. In practice, the clients receive an invoice without VAT and with the specific quote “reverse charge.”

New administrative obligations for sectors sensitive to VAT fraud

On 3 November 2023, the Luxembourg government submitted a draft bill to combat VAT fraud in certain domestic supplies of goods extremely sensitive to VAT fraud, such as laptops or mobile phones and raw or semi-finished metals. Under the bill, domestic supplies of such goods would be subject to the reverse charge rule. This rule implies that the payment of the VAT is shifted from the suppliers to their clients if the clients are VAT-registered, taxable persons and if the value of the supply exceeds €10,000 before VAT and without taking into account any subsequent reduction of the price of the transaction. In practice, the clients receive an invoice without VAT and with the specific quote “reverse charge.”

VAT: Will the temporary decrease in Luxembourg VAT rates for 2023 be extended?

In 2023, most Luxembourg VAT rates were reduced. Recently, the question has been raised about whether this measure will be reconducted. Below, we examine why it is unlikely.

Following an announcement on 21 September 2022 by the Luxembourg government, a law of 26 October 2022, reduced most Luxembourg VAT rates in 2023 by 1% as a measure to fight inflation. The VAT rates changed to 16%, 13%, and 7%, instead of 17%, 14% and 8%, while the super-reduced rate of 3% remained unchanged.

Input - September 2023

Belgian VAT circular: Impacts for residents with foreign employer-provided cars

On 4 September 2023, Belgian VAT authorities issued their circular 2023/C/72 regarding Belgian VAT treatment of company cars provided by foreign employers to employees residing in Belgium. Employers, including Luxembourgish ones, should assess if their car policies to determine if the cars they put at disposal of their employees are in scope of these new rules and take the necessary actions.

Input - July 2023

Advocate General opines on VAT impacts for directors

On 13 July 2023, the Advocate General with the Court of Justice of the European Union (CJEU), Mrs. Kokott, delivered her conclusions in the “TP” case (C-288/22). She opined that a natural person acting as director of company is not a VAT taxable person. If the Court follows this opinion – as yet unconfirmed –this might have substantial consequences in Luxembourg. Considering the usual delays, we could expect that the CJEU should deliver their ruling at the end of 2023 or the very beginning of 2024.

Input - May 2023

How to correctly apply VAT on company cars

The new circular is a useful reminder that Luxembourg employers must carefully consider the application of VAT in Luxembourg and other Member States when they provide company cars to their employees.