E-Commerce

V.A.T. advantages of establishing e-commerce activities in Luxembourg

With its pool of qualified service providers developing dedicated E-commerce and digital enterprises, Luxembourg has become the place to be in Europe - particularly for electronically supplied services such as TV and radio broadcasting and telecommunication services.

Luxembourg has attracted the presence of key players in communication technologies such as iTunes, Microsoft, Apple, Amazon, AOL and other leading international companies active in media, online gaming and electronic services.

 

FinTech in Luxembourg

The FinTech landscape in Luxembourg is thriving. An ever-growing number of companies from across the globe, typically start-ups, see Luxembourg as the ideal site to base their operations and to develop their business niche. Innovative services in the world of financial data analytics, IT infrastructure and e-commerce service providers, to name but a few, see Luxembourg as the FinTech hub of choice due to its significant share of the national economy and its close proximity to target clientele.

FinTech is a priority for the Luxembourg government and a pillar of the country's digital strategy for the future. In 2015, more than 150 FinTech companies had already established operations in Luxembourg including industry notables such as Amazon Payments, Rakuten and Yapital, a cashless cross-channel payment solution from German retail giant Otto.

 

E-Commerce & digital services and VAT in Europe

From 1st of January 2003, services provided by electronic means have been regulated by a Directive applicable to EU members (EC Directive n°2002/38/CE of 7th May 2002).

As specified by the Directive, 'services provided by electronic means' include:

  • website hosting and maintenance

  • software and equipment maintenance

  • software sales and updates

  • sale of pictures, texts, information, news, databases, music, films, games (including casinos, money, etc.), programs

  • political, cultural, artistic demonstrations

  • sports, scientific, entertainment events

 

This regime provides that VAT is due in the country where the end user - the client - is based:

  • non EU private clients (B-to-C)

  • non EU professional clients (B-to-B)

  • EU professionel clients (B-to-B)

  • EU private clients (B-to-C)

 


This is applicable for any supplier of services rendered by electronic means.

Suppliers and other providers not registered in the EU will have to register via a specific procedure in the EU country of their choice and will have to pay the VAT applicable for each service, depending on the end user's country.

However, until 2015, the Grand-Duchy of Luxembourg will still be an attractive place to set up a company to provide electronic services, as services rendered to EU private clients are taxable in Luxembourg at the rate of 15%.

 

From 2015, the VAT will be applicable depending on the country of residence of the individual  EU client as follows:

Hungary

27

Denmark, Sweden

25

Romania

24

Portugal, Finland, Greece, Ireland, Poland

23

Lithuania

22

Belgium, Lithuania, Italy

21

Austria, Slovenia, Estonia, Bulgaria, Czech Republic, Slovakia, UK

20

France

19,6

Netherlands, Germany

19

Malta, Spain

18

Luxembourg, Cyprus

15

 

Broadcasting Services in Europe:

The VAT rate applicable to TV and Radio broadcasting is set at 3% and is the most attractive in Europe when dealing with private EU customersFor services provided to any other foreign customers, the VAT is not due in Luxembourg..

 

E-Commerce and Permanent Establishment - when a server can be considered as a permanent establishment in Luxembourg?

 

Read also :

 

 

Corporate Department

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Creatrust is a member of the Ordre des Experts Comptables (Luxembourg) and an independent member of TGS Global Network Limited, an international network of professional business advisors.

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