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Input is your Deloitte guide to everything related to VAT in Luxembourg.

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Input- May 2020

Luxembourg VAT authorities revoke the tolerance for the late filing of VAT returns justified by COVID-19

On 12 May 2020, the Luxembourg VAT authorities announced that they revoke the tolerance for the late filing of VAT returns justified by COVID-19 and that taxpayers should file missing VAT returns within a short delay.

Input - March 2020

From 2024, new record keeping and reporting obligations imposed on EU payment services providers to fight against VAT fraud

In February 2020, the European Union Council has approved new measures (Directive and Regulation) imposing on payment services providers (PSPs) to collect and report data regarding cross-border payments as from 2024. CESOP, a new database to be set up by the EU Commission, will keep record of this information regarding cross-border payments within the EU, as well as payments to third countries or territories. National tax authorities will have access to CESOP to control the correct fulfilment of VAT obligations, mainly but not exclusively, on cross-border business to consumer (B2C) supplies of goods and services.

Input - March 2020

VAT on management services of investment funds: Opinion of the Advocate General in the important Blackrock case

On 11 March 2020, the Advocate General of the Court of Justice of the European Union (CJEU) delivered his opinion on the case Blackrock Investment Management UK Ltd (C-231/19).

Input - January 2020

Brexit: 11 months to get ready?

The UK should leave the EU on 31 January 2020. After 31 January 2020, the UK will enter a transitional period, which is due to end on the 31 December 2020. The first date could thus be qualified as the “political exit” date and the second date as the “effective exit” date. In theory, it is possible to extend this transitional period until either 31 December 2021 or 31 December 2022.

Input - October 2019

2020 VAT changes: understand the practical impact of the so-called “quick fixes”

On 1 January 2020, “quick fixes” that aim to simplify intra-EU goods transactions will enter in force. These quick fixes include a simplification regime for call-off stock and new rules regarding intra-EU supplies (proof of transport, increased importance of the purchaser’s VAT number, chain transactions). Economic operators should consider the possible impact of these new rules on their business in order to mitigate VAT risks in terms of additional VAT liabilities, registration and reporting obligations.

Input - June 2019

VAT on company cars used by Luxembourg employees residing in Germany: question referred to the Court of Justice of the European Union

Many employees of Luxembourg employers are entitled to a company car as a part of their remuneration. This implies a fringe benefit subject to Luxembourg income tax and social security contributions and VAT.

Input - May 2019

Update on foreign VAT refund claims

On 2 May 2019, the Court of Justice of the European Union released a favorable decision for taxable persons claiming back VAT to a Member State where they are not established.

Input - January 2019

VAT deduction of branches

On 24 January 2019, the Court of Justice of the European Union (“the CJEU”) in the “Morgan Stanley” case (C-165/17) has confirmed that branches which incur VAT on expenses used wholly or partly for head office supplies, must consider the activity of the head office for the purposes of determining the branch VAT recovery calculation.

Input - November 2018

No deduction of VAT on costs linked to the sales of shares by holding companies

On 8 November 2018, the Court has ruled in its C&D Foods decision (C-502/17) that a holding company, which invoices services to its sub-subsidiary, could not deduct the VAT incurred on the intended sales of shares of its subsidiary and sub-subsidiary. The Court bases its decision because the essential reason of the sale was to help the financial situation of the new proprietor of the company and on the absence of direct and immediate link of the VAT incurred with the taxable activities of the company. This decision contrasts with the recent decision RyanAir (C-249/17, 17 October 2018) where the Court accepted the deduction of the VAT incurred on costs related to an aborted acquisition of shares (see our input issued on 17 October 2018). It also diverges from the traditional holding jurisprudence. More importantly, the concept of “essential reason of the transaction” might further complicate the question of the VAT deduction for all taxpayers.

Input - October 2018

Deduction of VAT on aborted deal costs by holding companies

On 17 October 2018, the Court of Justice of the European Union (CJEU) ruled that a company could recover VAT on costs relating to an aborted acquisition of shares in another company to the extent that, based on objective elements, this company had the intention to provide management services subject to VAT to the acquired company (RyanAir, C-249/17). The decision of the Court is certainly an important evolution in its jurisprudence and should be examined with attention by Luxembourg holding companies that might be in a similar position even if each individual situation must be examined taking all relevant elements into account.

 

Overview of the 2018 VAT changes in Luxembourg

The introduction of the VAT group regime by the law of 6 August 2018 is certainly the most important VAT change of the year. However, this should not hide other changes that are also of importance for economic operators of different sectors. After a reminder of our VAT alert of April and July, we examine hereafter these different changes.

Input - July 2018

VAT group law voted by the Luxembourg Parliament

As announced in our newsletter of 16 April 2018, the Luxembourg Parliament has voted on 26 July 2018 on the draft bill n°7278 to introduce the VAT group into Luxembourg legislation. On 27 July, the State Council has given his agreement that the Parliamentary should not proceed to a second vote of the law. This makes the law definitive and close the Parliamentary process. The law enters in force on 31 July 2018. Compared to the draft bill, the voted law does not allow anymore the VAT authorities to exclude some members when their participation to the group may lead to a distortion of concurrence. We could consider this change as favorable for the legal certainty of the regime and have no other change to mention.

Input - April 2018

VAT group: draft bill lodged with the Parliament

On 16 April 2018 , the Luxembourg government has lodged with the Parliament the draft bill introducing the VAT group. Long awaited, this regime aims to avoid VAT on transactions between persons closely bound by financial, economic, and organizational links. While available and interesting for all sectors of activities, this regime is especially attractive for the financial sector, which has been affected by the decisions of the European Court of Justice of 21 September 2017, which refused this sector the benefit of the independent group of persons regime.

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