Luxembourg VAT guide : VAT & e-commerce logistics as of July 1st 2021

Benefit of Luxembourg advantages

• Located at the heart of Europe
• Free circulation of products within the EU
• No prefinancing of import VAT
• No prefinancing of VAT on EU purchases
• Possibility to opt for the new One Stop Shop (OSS) regime

Complying with EU VAT regulations

• Client has no bad surprise: prices include VAT
• The VAT of the country of destination applies, it can be declared using the new OSS regime
• Importations, purchases of goods delivered in Luxembourg and sales of goods in Luxembourg must be periodically declared to the Luxembourg VAT administration

VAT compliance requirements

Your company, owner of the goods sold, must :

• Be registered for VAT in Luxembourg
• If applicable, be registered with the OSS
• Periodically report its purchases and sales to the Luxembourg VAT authorities
• Pay VAT invoiced to the client
• If applicable, issue invoices in compliance with European VAT regulations

Before July 1st 2021, EU businesses performing distance sales of goods within the EU to customers located in another EU Member State had to register and pay VAT in the customers’ Member State if the locally set thresholds were exceeded.

As of July 1st 2021, new VAT rules apply. According to these new rules, VAT is due in the Member State of destination, with the possibility to declare VAT due in other Member States using the One Stop Shop (OSS) system.

The new VAT system: OSS

Prior to July 1 2021, EU businesses making distance sales of goods within the EU to individuals located in another EU member state had to register and pay VAT in the buyer’s member state if locally set thresholds were exceeded.

From July 1 2021, new VAT rules apply. Under these new rules, VAT is due in the Member State of destination, with the option of declaring VAT due in other Member States using the One Stop Shop (OSS) system.

What is the One Stop Shop (OSS)

The OSS is an optional electronic system allowing to:

• register for VAT electronically in a single Member State to report there all intra-EU distance sales of goods to private individuals
• declare and pay VAT due in the other member states in a single electronic quarterly return

Which sales does the OSS cover?

The OSS covers the distance sales of goods to EU customers (private individuals). The OSS does not apply to the following transactions:

• Domestic sales
• Exempt sales to taxable persons
• Exempt export sales
• Purchases

How to register and what do you need to do if you use the OSS?

Each EU Member State has an online OSS portal where businesses can register.

• Companies established in the EU must register to the OSS portal of their country of establishment;
• Companies established outside the EU must register to the OSS portal of the EU country where their stock is located.

This single registration will, however, be valid for all sales to consumers in other EU Member States.

If you opt to use the OSS you should:

• apply the VAT rate of the destination Member State
• submit an electronic quarterly VAT return via the OSS portal of the Member State where you are registered for OSS
• make a quarterly payment of the VAT declared in the VAT return to the Member State where you are registered for OSS
• keep records of all eligible OSS sales for 10 years

The OSS does not exempt you from the obligation to register for VAT in the country where the stock is held !

Discover our services

VAT SOLUTIONS offers various services to support you with your VAT requirements in Luxembourg and internationally:

• Review of your activities by country and preparation for the transition to the new OSS system
• Confirmation of the VAT treatment of your e-commerce flows
• Confirmation of applicable VAT rates by destination country
• Automated, real-time management of standard VAT rates by our eVAT Solutions platform
• European intermediary for non-EU sellers wishing to use the IOSS system
• Coaching/training
• Handling of VAT obligations in Luxembourg and abroad, including OSS; IOSS systems:
• • Assistance, preparation and filing of VAT registration and VAT returns.