ViDA in Luxembourg: A Phased Implementation
The European VAT in the Digital Age (ViDA) reform will progressively change the VAT rules applicable to businesses operating internationally within the European Union.
Draft Law No. 8812 marks the first step in this process in Luxembourg. It aims to transpose the ViDA provisions that will enter into force on 1 January 2027.
However, it should be noted that this draft law does not yet transpose the entire reform. The more structural changes, notably those scheduled to apply from 1 July 2028, will be addressed through subsequent legislative measures.
Electronic Platforms: Extension of the Deemed Supplier Mechanism
The VAT law currently in force provides that an electronic interface, such as a marketplace, platform, portal, similar device or other electronic interface facilitating the sale of goods to a non-taxable person, is deemed to have received and supplied the goods itself and is therefore liable for the VAT due on the sale. This is known as the “deemed supplier” mechanism, which currently applies to intra-Community distance sales made by sellers not established in the EU.
The draft law extends the category of buyers concerned, which is currently limited to non-taxable persons.
- The deemed supplier mechanism will also apply where the buyer is a taxable person or a non-taxable legal person whose intra-Community acquisitions are not subject to VAT under Article 2(2) of the Luxembourg VAT Law.
For the sellers and platforms concerned, the VAT treatment will therefore require the buyer’s VAT status to be identified accurately.
Call-Off Stock: Towards the End of the Consignment Stock Regime
How does the call-off stock regime currently work?
When a business transfers goods to another Member State for subsequent sale to a customer already identified at the time of the transfer, and provided that certain conditions are met, the transfer is not treated, at the time of the transfer, as:
- an intra-Community supply deemed to have taken place in the Member State of departure;
- an intra-Community acquisition by the supplier in the Member State of arrival.
The intra-Community supply and intra-Community acquisition take place later, when the goods are withdrawn from the stock.
This mechanism allows the supplier, subject to certain conditions, to avoid having to register for VAT in the Member State where the stock is held.
No new transfers after 30 June 2028
The draft law provides that goods dispatched or transported to another Member State may continue to benefit from this regime until 30 June 2028.
From 1 July 2028, no new transfers will be eligible for this regime.
Definitive abolition by 30 June 2029
The call-off stock regime will cease to apply definitively on 30 June 2029. This transitional period allows goods dispatched or transported by 30 June 2028 to benefit from the maximum 12-month period provided for the transfer of ownership of the goods to the purchaser.
New OSS transfer scheme from 1 July 2028
From 1 July 2028, a new OSS transfer scheme will allow businesses to report intra-Community transfers of their goods between Member States through a new One-Stop Shop.
This future regime will be broad enough to cover movements of goods currently falling under the call-off stock regime, which explains why the existing regime is being phased out.
Combined with an extension of the existing EU OSS regime to local B2C sales, as well as new rules applicable to local B2B sales, these developments will have significant implications for businesses’ VAT reporting obligations and foreign VAT registrations where they hold stock in other Member States.
Ultimately, these new arrangements may eliminate the need to maintain VAT registrations in Member States where businesses hold stock. However, this conclusion will need to be assessed on a case-by-case basis, depending on the other transactions carried out by the business from that stock.
Draft Law No. 8812, however, only provides for the abolition of the call-off stock regime. The future OSS transfer scheme, the extension of the EU OSS regime and the introduction of new rules for local B2B transactions will still need to be transposed into Luxembourg legislation through subsequent legislation.
Taxation Rules for TBE Services and Intra-Community Distance Sales: Application of the €10,000 Threshold
The draft law provides an important clarification regarding the application of the European €10,000 threshold to certain B2C services and intra-Community distance sales of goods.
By way of reminder, this threshold applies to cross-border supplies of telecommunications, broadcasting and television services and electronically supplied services (“TBE services”), as well as to intra-Community distance sales of goods carried out by a taxable person established in the European Union.
If the €10,000 threshold is not exceeded in either the current or the preceding calendar year, these supplies may remain subject to VAT in the Member State where the taxable person supplying the TBE services is established, or in the Member State where the goods are located at the time their dispatch or transport begins.
To date, there has been some uncertainty regarding how the €10,000 threshold should be assessed. In particular, the legislation did not specify whether intra-Community distance sales made from stock held in another EU Member State could benefit from the threshold.
The draft law clarifies the position by specifying that distance sales of goods eligible for the threshold are those involving goods dispatched or transported only from the Member State in which the taxable person is established.
Consequently, sales made from stock held in another Member State are excluded from the threshold and are taxable from the first euro in the Member State of destination.
This clarification is particularly important for businesses using multiple European warehouses, fulfilment centres, Amazon FBA or local stock held in different Member States.
Importantly, the draft law provides that where a taxable person uses the EU OSS regime, the option to tax supplies in the Member State of destination is deemed to have been exercised. This prevents the €10,000 threshold from applying to sales of goods dispatched from the Member State in which the taxable person is established.
Example : A business established in Luxembourg makes €8,000 in distance sales from stock held in Luxembourg to individuals located in other Member States, and €25,000 in distance sales from stock held in Germany.
For the purpose of assessing the threshold applicable to the Luxembourg establishment, sales made from the German stock should not be taken into account when calculating the €10,000 threshold. Only sales dispatched from the Luxembourg stock may benefit from the application of Luxembourg VAT.
Provided that all other conditions laid down by law are met and that no option to tax in the Member State of destination has been exercised, the business may continue to apply Luxembourg VAT to the relevant distance sales as long as the applicable threshold has not been exceeded.
However, in order to account for the VAT due in Germany, the business decides to opt for the EU OSS regime. As a result, it will lose the benefit of the €10,000 threshold, since registration for the EU OSS regime constitutes an option to tax in the country of destination.
OSS: Changes to the Rules on When VAT Becomes Due
The draft law clarifies when VAT becomes due for transactions falling under the EU and non-EU OSS regimes.
VAT becomes due when the supply of goods or provision of services takes place, except in the case of an advance payment, for which VAT becomes due when the payment is received.
This provision aims to harmonise the point at which VAT becomes due across Member States.
For businesses, this may require a review of ERP settings and the rules determining the relevant OSS reporting period.
Non-EU OSS Regime: Extension of the Scope
The non-EU OSS regime allows businesses not established in the European Union to centralise, in a single Member State, the reporting and payment of VAT due on certain B2C supplies of services.
Currently, only services supplied to non-taxable persons established, domiciled or habitually resident in a Member State fall within the scope of the non-EU OSS regime.
From 1 January 2027, the non-EU OSS regime will cover all supplies of services made in the European Union by a taxable person not established in the EU to a non-taxable customer, regardless of where the customer is established or resides.
This extension may allow certain non-EU businesses to further centralise their VAT obligations through the One-Stop Shop.
It should also be noted that, when applying for identification under the non-EU OSS regime, a taxable person not established in the Community must provide certain electronic information, including its website address.
This requirement may create practical difficulties, as some service providers do not have a website.
The draft law therefore clarifies that website addresses only need to be provided where a website actually exists.
VAT Refunds under the Non-EU OSS and EU OSS Regimes
By way of reminder, the EU OSS and non-EU OSS regimes only allow businesses to collect VAT; they do not allow the deduction of VAT incurred on purchases.
The draft law provides further clarification on the recovery of VAT incurred in connection with transactions reported under one of the OSS regimes.
For the EU OSS regime, it confirms that foreign VAT paid in other Member States in connection with transactions reported through the EU OSS regime can be recovered by submitting a VAT Refund claim under Directive 2008/9/EC, unless the taxable person is also VAT-registered in the Member State concerned.
For the non-EU OSS regime, it likewise confirms that Luxembourg VAT incurred in connection with transactions reported through the non-EU OSS regime can be recovered through the refund procedure provided for under Directive 86/560/EEC (the “13th Directive”).
This could, for example, apply to the local purchase of goods that are subsequently added to stock, or to the local purchase of services subject to VAT locally under a specific place-of-supply rule.
Note: Where certain Member States make VAT refunds under the “13th Directive” conditional on reciprocity with the country where the business is established, this condition is waived for expenses directly related to transactions actually covered by the OSS regime. Luxembourg, however, has not applied this reciprocity requirement since 1999.
VAT on Electricity, Gas, Heating and Cooling: Temporary Extension of the OSS Regime
From 1 January 2027 to 30 June 2028, certain supplies of gas, electricity, heating and cooling may fall within the scope of the EU OSS regime where they are made by a supplier not established in the Member State of taxation to persons whose intra-Community acquisitions are not subject to VAT or to non-taxable persons. For this purpose, certain supplies of gas, electricity, heating and cooling will be treated, solely for the purposes of the EU OSS regime, as intra-Community distance sales of goods.
This legal fiction will allow certain suppliers not established in the Member State where VAT is due to report these transactions through the EU OSS regime.
The measure is relevant to electricity suppliers, electric vehicle charging operators and, more broadly, businesses in the energy sector carrying out cross-border activities.
From 1 July 2028, these transactions are expected to fall directly within the EU OSS regime under the new ViDA provisions and will no longer be treated as intra-Community distance sales of goods.
IOSS and the Cross-Border Small Business Exemption: Two Incompatible Regimes
The benefits of the IOSS regime and the VAT exemption regime for small businesses cannot be combined.
A taxable person benefiting from the exemption will therefore have to waive it if they wish to use the IOSS regime. The aim is to prevent a risk of double non-taxation.
This development will need to be taken into account by small businesses engaged in international e-commerce. The IOSS regime is based on taxing distance sales at the rate applicable in the Member State of destination, whereas the exemption may result in no VAT being charged.
Combining the two regimes would therefore create a risk that is incompatible with the underlying structure of the system.
It should also be noted that, when applying for identification under the IOSS regime, a taxable person not established in the Community or, where applicable, their intermediary must provide certain electronic information, including their website addresses. This requirement may create practical difficulties where the operator does not have a website.
As with the non-EU OSS regime, the draft law clarifies that website addresses only need to be provided “where applicable”, i.e. where a website actually exists.
Small Business VAT Exemption: Clarifications on the Cross-Border Regime
Since 1 January 2025, small businesses established in a Member State may, subject to certain conditions, benefit from the VAT exemption in other Member States. The mechanism is based, in particular, on prior notification to the Member State of establishment and on a specific identification number bearing the suffix “EX”.
Draft Law No. 8812 supplements the Luxembourg provisions relating to this regime.
A 35-Business-Day Deadline
The draft law provides that the date from which the exemption may be used in another Member State must be no later than 35 business days after receipt of the prior notification or its update.
However, additional time may be required in certain specific situations to allow the authorities to carry out checks aimed at preventing fraud or tax evasion.
Improved Management of Partial Exits from the Regime
The text also clarifies the information obligations of the Luxembourg Direct Tax Administration (Administration des contributions directes – ACD) when a business ceases to benefit from the exemption in one or more Member States while continuing to benefit from it in others.
The new text more clearly distinguishes between two situations:
- Complete withdrawal from the regime: the tax administration deactivates the individual identification number.
- Withdrawal from the regime in certain Member States only: if the business continues to benefit from the exemption in other Member States, the identification number is not necessarily deactivated.
The tax administration will update the information relating to the Member States concerned and must inform the business without undue delay.
ViDA: Preparing Now for the Changes Coming in 2028
Draft Law No. 8812 is the first step in a much broader and more far-reaching reform.
From 1 July 2028, the ViDA reform will expand the scope of the OSS regimes and introduce a new OSS transfer scheme for transfers of a business’s own goods between Member States.
For businesses that currently hold several foreign VAT numbers due to their logistics arrangements, these developments represent a significant opportunity for simplification.
An early review of stock held abroad, transfers of own goods, transactions currently covered by the call-off stock regime, sales made from foreign stock and the related reporting obligations will help identify which VAT registrations could be eliminated once the new rules enter into force.
However, it will still be necessary to assess whether certain transactions carried out in the Member States concerned continue to justify maintaining a local VAT registration.
The ViDA reform should therefore be addressed from both a VAT and supply chain perspective.
VAT Solutions Luxembourg: Supporting You with the Implementation of ViDA
VAT Solutions Luxembourg, an expert in supply chain VAT matters, supports businesses with VAT mapping of their flows, analysis of stock movements, review of foreign VAT registrations, identification of transactions eligible for the OSS/IOSS regimes, assessment of the impact of ViDA and adaptation of VAT settings in their ERP systems.
An early analysis will not only help businesses ensure compliance with the obligations applicable from 2027, but also prepare for the simplification opportunities that will arise from 2028 onwards.
Do you hold stock in several Member States, use the call-off stock regime or have multiple foreign VAT numbers? Contact our experts to assess the impact of ViDA on your organisation.
Note: This article is based on Draft Law No. 8812 as submitted on 30 July 2026. The text remains subject to change during the legislative process.
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