VAT suspensive arrangements

Luxembourg VAT is normally due when goods are supplied in Luxembourg. However, VAT suspensive arrangements allow to delay payment of VAT.

These arrangements are temporary and they come to an end when the goods leave the suspensive arrangement in which they were placed.

VAT suspension on sales of non-Union goods

It is possible to sell non-Union goods that are in Luxembourg and that have been placed in a customs suspensive procedure.

If the sale involves the removal of the goods from the customs suspensive procedure, the sale is subject to VAT depending on the nature of the transaction:

• Luxembourg VAT will be due for national supply of goods
• the sale will be VAT-exempt if it is:
  • an intra-Community supply of goods to a taxable person in another Member State
  • or an export to a third country.

For example: A Luxembourg company orders goods from a Korean seller. The concerned goods are first stored in a customs warehouse in Luxembourg. The VAT is suspended. Next, the seller supplies the goods to the company's factory after having declared them for import. The supply by the Korean seller is subject to Luxembourg VAT.

However, if the goods are maintained in the suspensive customs procedure, the sale may benefit from the VAT suspension specified in Article 60bis of the Luxembourg VAT law (LTVAL). For this exemption to apply:

• the holder of the customs authorization must be approved by the Customs and Excise Administration for implementation of the VAT suspensive arrangement specified in Article 60bis of the LTVAL
• declarations must be filed with the Customs and Excise Administration when entering and leaving the VAT suspensive arrangement and documentation must be maintained. In practice, the customs declarations and documentation constitute the declarations and documentation required for the VAT suspensive arrangement
• the transaction must not be aimed at final use or consumption.

For example: A Luxembourg company orders goods from a Korean seller. The concerned goods are first stored in a customs warehouse in Luxembourg. The VAT is suspended. Next, the Korean seller puts the goods at the disposal of its Luxembourg customer in the customs warehouse, without having been customs cleared. The supply by the Korean seller, having maintained the goods under the customs procedure, benefits from the VAT suspension specified in Article 60bis of the LTVAL.

VAT suspension on sales of Union goods

Some Union goods may benefit from the VAT suspension specified in Article 60bis of the LTVAL. These are Union goods:

• introduced in a free zone
• or placed in a VAT warehouse.

A VAT warehouse may be used for the following goods:

• goods subject to excise duties placed in a fiscal warehouse
• goods listed in Annex D of the LTVAL, that are not intended to be delivered for retail sale
• goods intended for so called "duty-free" shops in airports (tax-free sales to passengers residing in third countries).

If the sale involves the removal of the goods from the VAT suspensive arrangement (free zone or VAT warehouse), the sale is subject to VAT depending on the nature of the transaction:

• Luxembourg VAT will be due for national supply of goods
  
• the sale will be VAT-exempt if it is:
  • an intra-Community supply of goods to a taxable person in another Member State
  • or an exportation to a third country.

For example: a Luxembourg company buys Union goods from a Luxembourg seller. The concerned goods are first stored in a VAT warehouse in Luxembourg. Next, the seller delivers the goods to the customer company's factory. The delivery is subject to Luxembourg VAT.

However, if the goods are placed or maintained in the suspensive VAT procedure, the sale may benefit from the VAT suspension specified in Article 60bis of the LTVAL. For this exemption to apply:

• the operator responsible for the warehouse must be approved by the Customs and Exercise Administration for implementation of the VAT suspensive arrangement specified in Article 60bis of the LTVAL. The operators responsible for fiscal warehouses are automatically approved
• declarations must be filed with the Customs and Excise Administration when entering and leaving the suspensive procedure and documentation must be maintained
• the transaction must not be aimed at final use or consumption.

For example: A Luxembourg company orders goods from a Luxembourg seller. The concerned goods are first stored in a VAT warehouse in Luxembourg. Next, the seller puts the goods at the disposal of its customer in the VAT warehouse. The sale by the Luxembourg seller benefits from the VAT suspension specified in Article 60bis of the LTVAL.