Luxembourg - Domestic reverse charge extended to supplies of certain electronic devices and metals

Following the example of other EU member states, Luxembourg has extended its domestic reverse charge mechanism to apply to certain supplies of electronic devices and metals in an effort to combat the growing risk of “carousel fraud” in these sectors (Law of 22 December 2023). Carousel fraud occurs mostly within a chain of participants where a recipient claims an input VAT refund for an amount of tax that has not actually been paid by the supplier to the tax authorities.

As from 1 January 2024, VAT liability is shifted to the customer for the following supplies of goods:

Mobile telephones;
Integrated circuit devices, such as microprocessors and central processing units in a state prior to their integration into end-user products;
Game consoles, tablet pcs, laptops and headphones; and
Supplies of raw and semi-finished metals, including precious metals, where they are not covered by the margin regime for second-hand goods, works of art, collector's items and antiques or under the special scheme for investment gold.

To distinguish supplies of goods intended for final consumption and those for commercial purposes, the domestic reverse charge will apply only if the net sales amount of the relevant transaction exceeds EUR 10,000 (without taking into account any subsequent price reductions). If the net sales price is under EUR 10,000 the seller remains responsible for the VAT. Furthermore, this new rule covers supplies made to customers that are taxable persons (B2B transactions).

Erwan Loquet
Dimitrios Karoutis
BDO in Luxembourg