New Information on VAT

Concern : New Information on VAT

We would like to inform you that rates of VAT in the Grand Duchy of Luxembourg will increase from January 1st, 2015. A draft law (draft 6720 October 15, 2014) was introduced in Parliament and unless modifications on their part rates should have the following modifications:

  • The standard rate will increase from 15% to 17%,
  • The interim rate increase of 12% to 14%,
  • The reduced rate will increase from 6% to 8%,
  • The super-reduced rate unchanged at 3% except as it concerns:
    • Operations in the trade of alcoholic and “spirit” beverages,
    • The assignment of a house/appartement for a primary residence in the hands of a third party.

In such case, the rate increase from 3% to 17%.

A short summary (not exhaustive):

  • The super-reduced rate is applicable to the great majority of consumer products, such as: beverage (excluding alcohol), food and catering, water supply, access to cinemas, sports facilities, or drug.
  • The reduced rate is a marginal rate that applies only to some goods and services such as hairdressers, retouching services, shoemakers, companies window cleaning and cleaning in private households.
  • The intermediate rate includes the following goods and services: heating oil, wine sales titrating 13 ° or less, custody and management of securities in banks, …
  • The standard rate includes all the rest.

The VAT increase will applicable from January 1st, 2015. Some questions were asked to the VAT Administration concerning Advances and Credit Notes.

The replies were as follows:

  • Advances :

A special provision of the law provides for application of VAT at the moment of receipt. This means that when a person executes a payment in 2014, it will be subject to VAT at 15% and when the final payment will be made in 2015, the balance will be subject to 17% VAT.

  • Credit Notes :

From the point of view of the law, a credit note is to be considered as an invoice. Therefore, the rules of application of VAT are in use. However, if an invoice is issued in 2014 at a rate of 15% and a credit note would cancel this invoice in 2015, it should be issued at a rate of 17%. However, the VAT Administration would accept that in such cases the credit note is issued at the rate initially charged. This implies that companies can still use the old rate for such cases.

For our clients and / or relations, for which the accounting service, is not organized by our office, we recommend you to contact your Accounting Software Provider as to make the necessary changes before the January 1st, 2015.

C.G.E. Sàrl

Membre de l’Ordre des Experts Comptables


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