- Complex VAT Landscape: Luxembourg’s VAT compliance is becoming more intricate and digitalized, particularly as the country adapts to EU tax reforms like the VAT in the Digital Age (ViDA) initiative, necessitating businesses to stay informed on new obligations related to VAT rates, registration rules, and e-invoicing.
- VAT Rates and Registration Requirements: For 2025, Luxembourg features a standard VAT rate of 17% and various reduced rates. Businesses must register for VAT based on their turnover, with specific rules for local and foreign companies, including a threshold of €50,000 for local businesses and a zero threshold for foreign businesses not using the One Stop Shop (OSS) scheme.
- E-Invoicing and Future Compliance: E-invoicing is mandatory for public sector transactions, utilizing the PEPPOL network, while B2B invoicing is optional but encouraged. Looking ahead, businesses must prepare for upcoming changes under the ViDA directive, including real-time reporting and simplified VAT registration for cross-border transactions, to maintain compliance and gain a competitive advantage.
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