VAT Guide for Freelancers in Luxembourg

Freelancer VAT summary for Luxembourg

  1. The Luxembourg government levies a standard VAT rate of 17%, with reduced rates of 14%, 8% and 3% charged based on the type of services or goods you provide.
  2. The VAT registration threshold for a freelancer in Luxembourg is €35,000. 
  3. VAT in Luxembourg is administered by The Administration of Registration, Domains and VAT (AED); you can visit their website for regular updates and information on Luxembourg’s VAT laws.

 

Luxembourg is part of the European Union and, as such, follows the EU VAT directive, which aims to harmonise VAT rates within the EU. This directive basically specifies that VAT rates must be within a specific range. Additionally, you must pay VAT to the government where the product is consumed, regardless of where you’re supplying from. That means, if you work as a freelancer in Luxembourg, you pay VAT to the Luxembourg government. 

Understanding the nitty-gritty of Luxembourg’s tax processes may seem tricky, which is why we made this simplified VAT guide to help you navigate the system. Let’s go!

What are the VAT rates in Luxembourg?

A solopreneur based in Luxembourg is subject to four different VAT rates. The rate you charge depends on what kind of goods and services you sell:

  • The Standard Rate of 17% - Unless the items or services you provide fall under the reduced rate or zero-rated category, you should charge the standard VAT rate of 17%.
  • The Reduced Rate of 14% - 14% applies to certain wines, printed advertising content, heating and cooling system, safe custody, mineral oils, mineral fuels, etc.
  • The Reduced Rate of 8% - 8% applies to cleaning private households, simple bicycles, shoes and leather goods repair, clothing, hairdressing, electricity, LPG, firewood, decorative flowers and plants, some antiques and art, etc.
  • The Super-Reduced Rate of 3% - The super-reduced rate of 3% applies to foodstuffs, soft drinks, children’s clothing, some medical equipment for disabled persons, some pharmaceutical products, certain books and ebooks, certain newspapers, entrance fees to cultural events and amusement parks, some cable TV service, hotel accommodations, restaurants (excluding alcoholic beverages), waste-water treatment, etc.
  • The Zero Rate (0%) - This rate applies to intra-community and international transport. Zero-rated goods and services are taxable, but you should charge your customers 0% VAT in your invoices and create a report based on your returns. 

When should you register for VAT in Luxembourg?

Did you know the self-employment rate in Luxembourg is only 8.7%, one of the lowest rates in the EU? If you are one of the lucky few sole traders providing services in Luxembourg, you are required to register and pay VAT to the government, given your annual turnover exceeds €35,000. Even if you estimate that your turnover will exceed €35,000 in the following year, you should register for VAT. 

The threshold for expat freelancers who are distance selling to taxable clients in Luxembourg is €100,000 per year, so you must register for VAT if your annual sales revenue exceeds this.  

Thresholds are the primary but not sole determinant of when you should register for VAT. You may need to register for VAT based on other scenarios even when you do not meet the above mentioned thresholds. 

How to register for VAT in Luxembourg

If you are liable to register for VAT, you should first open a bank account or a postal checking account (CCP) at a Luxembourg or foreign bank. You will require a copy of your identity card and passport. If you have a registered practice, you also need constitutional documents in either French or German.

Luxembourg law requires freelancers to file an initial declaration with the Registration Duties, Estates and VAT Authority. You can file this initial declaration online using MyGuichet.lu or via post using the corresponding forms.

In order to file an initial declaration, you must provide the following information:

  1. Your name, surname, civil status and private contact details
  2. Bank account or a postal checking account information for Luxembourg or a foreign bank
  3. Date of start for your economic activity, i.e. the first period for which a VAT declaration will have to be submitted
  4. Financial year
  5. Estimated forecast or details of the types of acquisitions and supply of goods and services
  6. Estimated forecast of annual turnover
  7. A power of attorney for your fiscal representative (if you are a non-EU citizen). Expat freelancers from outside the EU require a fiscal representative to represent them for tax-related purposes.

You should register for VAT within 15 days of commencing your taxable services. However, if your service crosses the tax exemption limit, you have to register for VAT before the end of the month when the tax exemption limit is exceeded.

Another option is to use Mini One-Stop Shop (MOSS) to register for VAT. MOSS is an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return and is beneficial if you have operations in multiple EU countries. In addition, MOSS allows you to avoid registering in each Member State of consumption. Even if you’re based outside the EU, you can register with MOSS in Ireland or other EU countries. To learn more, click here.

Alternatively, you can hire an accountant (or agency) to handle your VAT registration, payment and returns with the tax office. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have. With Xolo Go, you can use a slice of our company as a legal framework to invoice your clients, regardless of whether they're across town or the ocean.

How frequently to report VAT?

If your yearly turnover is less than €112,000, you can report VAT returns once a year. On the other hand, if your turnover is between €112,000 and €620,000, you must submit VAT quarterly and annually. If your turnover exceeds €620,000, you are required to report VAT monthly and annually.

Financial Obligations of VAT Registered Freelancers in Luxembourg

Once you register for VAT, you need to make sure to:

  • Charge the correct VAT rate in every transaction
  • Pay any VAT owed to the Luxembourg government annually, quarterly or monthly based on your turnover
  • File VAT returns
  • Maintain VAT records and a VAT account

Furthermore, every VAT-registered individual is required to:

  • Keep track of all purchases and transactions through printed copies of the sent and received invoices
  • Keep a running total of their VAT account
  • Make sure their VAT invoices are accurate
  • Keep their agreements on sell-billing
  • Record the self-billing vendors' names, addresses, and VAT numbers
  • Record Notes (debit/credit)
  • Record imports and exports
  • Keep records of bank statements, check stubs, cash books, till rolls, and paying-in slips in addition to your VAT account.

If you use Mini One-Stop Shop (MOSS) services, your records need to be preserved in a legible and complete format for at least ten years, either physically or electronically.

Feeling overwhelmed? At Xolo, we can help you to future-proof these vital documents by automatically generating, storing, and maintaining them electronically in our servers for as long as you need them.

How Xolo Can Help

The tax registration process can sometimes be confusing, but we hope this guide has helped clear your doubts about Luxembourg VAT regulations! If you’re still worried about the different schemes and numbers and paperwork, Xolo offers a range of solutions that handle all the hassle while you focus on your core competencies. 


  • Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!
  • We offer different tiers of service depending on the solopreneur’s, or as we call them, Xolopreneur's, individual needs.
  • Once you get your business set up, you can run it from anywhere in the world! So whether you’re looking to gain access to the EU market or a digital nomad - this is the place for you! 
  • With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC. 
  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.

Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Luxembourg in no time!