Indirect Tax News - February 2020

Luxembourg authorised by the Council of Europe to increase its small entrepreneurs’ threshold

Pursuant to Council Implementing Decision (EU) 2017/319 as applied in the domestic law (article 57 of Luxembourg VAT Law), by way of derogation from Article 285 of Directive 2006/112/EC (VAT Directive), Luxembourg exempted from VAT taxable persons whose annual turnover was EUR 30,000 or less. This exemption from VAT was applicable until 31 December 2019.

On 2 May 2019, Luxembourg asked the Commission for authorisation to continue to apply the derogation after 31 December 2019 and to increase the applicable threshold from EUR 30,000 to EUR 35,000.

On 19 December 2019, the Council of the European Union accepted Luxembourg's request via Decision No 2019/2210. Thus, as of 1 January 2020 Luxembourg is authorised to exempt from VAT taxable persons whose annual turnover is EUR 35,000 or less. The provision only applies to Luxembourg resident taxpayers. This authorisation applies until 31 December 2022 or until the entry into force of a Directive amending Articles 281 to 294 of the VAT Directive on a special scheme for small enterprises, whichever is earlier.

The EU Council's Decision is directly applicable but it should be noted that Luxembourg’s legislator has not yet amended article 57 of the Luxembourg VAT Law.

Erwan Loquet

Dimitrios Karoutis