The glossary to understand and take action

VAT

Value added tax (VAT) is a consumption tax applied to transactions falling within its scope according to their own rules.

Notion comptable, fiscale ou juridique · Luxembourg Fiduciaries Editorial Team · Reviewed on

Understand the scope

Definition and points to distinguish

Classifying the transaction, its location and the parties comes before selecting the rate. Exemption, reduced rate and reverse charge are different treatments.

In your file

What this changes in practice

VAT must be assessed transaction by transaction: scope, location, possible exemption, liable person and rate. The business must then determine its invoicing and filing obligations, as well as its right to deduct. Tax collected from the customer is not freely available income. A mixed activity, foreign customers or a change of regime may require different software and accounting settings.

A scenario to help you understand

Educational example

A company purchases equipment and invoices services. VAT shown on purchases is not automatically recoverable in full: the right to deduct depends in particular on the use of the equipment and the activity’s regime.

Fictitious situation, presented to illustrate the concept.

Prepare for what comes next

Points to check

  • Qualifier chaque catégorie d’opérations
  • Vérifier le régime et les mentions de facture
  • Rapprocher comptabilité et déclarations

The practical question

Find out more

La TVA encaissée appartient-elle au chiffre d’affaires ?

La TVA collectée pour le compte de l’administration se distingue en principe du produit de la vente dans les comptes de l’assujetti. Il faut suivre séparément les montants collectés, déductibles et à régler selon le régime. Une trésorerie bancaire élevée après facturation peut donc inclure des sommes destinées à une future échéance de TVA.

Connecting concepts

Terms to know as well

Continue with the concepts, contacts and procedures related to this topic.

VAT taxable personA VAT taxable person independently carries out an economic activity subject to VAT rules.Right to deduct VATThe right to deduct allows, subject to conditions, the deduction of input VAT incurred in connection with transactions giving rise to that right.VAT returnThe VAT return reports transactions and tax amounts to the AED according to the regime assigned to the taxable person.Sales invoiceA sales invoice describes the transaction invoiced to a customer, with the applicable information and VAT treatment.Registration Duties, Estates and VAT Administration (AED)The Registration Duties, Estates and VAT Administration (AED) manages, in particular, VAT and other matters falling within its remit.Credit noteA document that reduces or cancels all or part of an invoice by identifying the transaction and the correction.

Put it into practice

Explore further with our guides

Practical guideVAT returns in Luxembourg: frequency, preparation and checksPractical guideSales to consumers: organising contracts, invoices and complaintsPractical guideVAT in Luxembourg: rates and checks before invoicingPractical guideOSS portal: preparing VAT for distance sales

Sources and verification

References consulted on 20 September 2026. Official procedures specify the applicable conditions and exceptions.

This guide explains a general process. The applicable rules depend on your situation; it does not constitute personalised advice. Report a correction.

A definition gives you a reference point. To examine your situation, clarify your question with a professional.