VAT group regime available in Luxembourg

The Law of 6 August 2018 implements the Value Added Tax (“VAT”) group regime in Luxembourg (the “VAT Group”). The Law introduces a new Article 60ter in the Luxembourg VAT law¹ in accordance with Directive 2006/112/EU. This comes in response to the recent judgment of the European Union’s Court of Justice which has restricted the scope of the VAT exemption applicable to services provided by independent groups of persons (“IGP”).

The main advantage of this regime is that all members of a VAT Group will be considered as one single taxable person for VAT purposes so that supplies between group members will be disregarded for VAT purposes.

This feature makes the VAT group attractive for financial and insurance groups using the former IGP regime but also generally for groups performing VAT-exempt supplies without a (or with limited) VAT recovery right in Luxembourg (e.g. in the private equity, real estate, asset management sectors) or groups which aim at improving their cash-flow.

For further information, see the article "VAT group regime available in Luxembourg" published on our website.