VAT - Provision of services

The 'provision of services' refers to all transactions that do not constitute a delivery of goods nor an intra-EU acquisition or import of goods.

It includes the sale of a service or the rental of tangible goods but not the sale of a tangible good.

The VAT applicable to the provision of services depends on the type of customer and the type of service.

VAT is, in principle, payable:

  • in the customer's country of establishment in the case of a provision of services between taxable persons ("B2B – Business to Business" taxable persons, i.e. between professionals);
  • in the service provider's country of establishment in the case of the provision of services to end consumers ("B2C – Business to Consumer", i.e. between professionals and consumers).

Some services are an exception to this rule, for both taxable and non-taxable persons.

Who is concerned

The obligations regarding the application of VAT with respect to the provision of services must be observed by any business subject to VAT and which:

  • provides taxable services in another country of the European Union (EU);
  • or receives services provided by foreign businesses.

Preliminary steps

Businesses liable for VAT in Luxembourg must:

How to proceed

Principle

B2B – VAT in the customer's country of establishment

Services provided between taxable persons ('B2B') are in principle subject to VAT in the customer's country of establishment, i.e. in the country in which its registered office is located or, failing this, where it has a permanent establishment which is receiving the services.

B2C – VAT of the service provider's country of establishment

Services provided to non-taxable persons ('B2C') are in principle taxable in the service provider's country.

Example: if a Luxembourg lawyer provides services to a private individual established in Belgium, said services shall be deemed to be located in Luxembourg. The Luxembourg lawyer must therefore issue an invoice including Luxembourg VAT.

Exceptions common to both B2B and B2C relationships

Building-related services

VAT is due in the country in which the building is located.

Example: a French company carries out work on a building located in Luxembourg on behalf of a Belgian company. Luxembourg VAT applies, because the building is located in Luxembourg. The French service provider must therefore register for VAT in Luxembourg.

Transportation of persons

VAT is due in the various countries travelled through based on the distance covered.

Example: a German coach company transports passengers from Trier to Brussels via Luxembourg. Passenger transport services are taking place in Germany, Luxembourg and Belgium. The company will need to register for VAT in each country concerned (unless it is exempted).

Services in the areas of culture, arts, sports, science, education, entertainment and similar events

VAT is due in the place where these events actually take place.

Example: a Belgian company buys entrance tickets to a show in Luxembourg for its clients. Luxembourg VAT must be applied, because the event takes place in Luxembourg.

Catering services (other than on board a train, boat or aircraft)

VAT is due in the country in which the service is materially executed.

Short-term leasing of means of transport

VAT of the country where the lessee will take possession of the means of transport applies.

A means of transport is a vehicle whether or not it is motorised or any other equipment devised for the transportation of goods or persons from one place to another, which may be drawn, towed, or pushed by vehicles.

Short-term leasing is defined as being leasing of less than 30 days (other than in the case of boats for which the leasing period is 90 days).

Example: a Luxembourg company rents a vehicle in Germany for 15 days. German VAT is applicable.

Exceptions in B2C relationships

Services provided by intermediaries acting on behalf of others

VAT is due in the country in which the main transaction is carried out.

Intra-EU transportation of goods

VAT is due in the country of departure of the goods.

Transportation of goods other than in intra-EU transportation

VAT is due in the various countries travelled through based on the distance covered.

Transport-related services

VAT is due in the country in which the service is materially executed.

Example : a Luxembourg tourist has his car repaired in Spain. The Spanish mechanic shall apply Spanish VAT on the service provided.

Work on and valuation of movable tangible property

VAT is due in the country in which the service is materially executed.

Provision of intangible or intellectual services outside the EU

VAT is due in the customer's country.

The following are considered to be 'intangible services':

  • transfer and concession of copyrights, patents, licences, brands;
  • advertising services;
  • legal, consulting, chartered accountant, engineering services, etc.;
  • data processing and provision of information;
  • financial, insurance and reinsurance transactions;
  • provision of personnel;
  • rental of movable tangible assets (other than the rental of means of transport which remains subject to the principle of origin);
  • provision of access to natural gas or electricity distribution systems or heating or cooling networks (and directly related services);
  • services provided electronically.

Example: a Luxembourg e-commerce undertaking provides online training to a person in the USA. As the service is purchased by a customer based in a non-EU country, Luxembourg VAT is not applicable.

Services in the fields of telecommunication, radio broadcasting and television

VAT is due in the service provider's country of establishment, unless the non-taxable person is established outside of the EU. In this case, the services provided are taxable in the buyer's country of residence as is the case for other intangible services. On the other hand, these services are taxable in the country where they are effectively being used and performed, on condition that the services were provided by a taxable person established outside the EU to a non-taxable person established in the EU.

Summary tables

Place of taxation of provision of services between Member States

Types of provision of services:

B2B relationship

B2C relationship

General rule

Buyer's country

Service provider's country

Building-related services

Location of the building

Transportation of persons

Place of transportation

Intra-EU transportation of goods

Buyer's country

Country of departure

International transportation of goods

Buyer's country

Place of departure

Transport-related services

Buyer's country

Place of material execution

Services in the areas of culture, arts, sports, science, education, and similar entertainment events

Place of material execution

Work on and valuation of movable tangible property

Buyer's country

Place of material execution

Catering services

Place of material execution

Services of intermediaries

Buyer's country

Buyer's country of establishment

Short-term leasing of means of transport

Place of provision of means of transport

Long-term leasing of means of transport

Buyer's country

Place of provision of means of transport

Services in the fields of telecommunication, radio broadcasting and television

Buyer's country

Service provider's country (unless there is an exception)

Place of taxation of provision of services between a Member State and a non-EU State
Type of provision of services

B2B

Person established outside the EU

B2B

Service provider established outside the EU

B2C

Person established outside the EU

B2C

Service provider established outside the EU

General rule

No taxation

Buyer's country

Service provider's country

No taxation

Building-related services

No taxation

Location of the building (if located in the EU)

No taxation (if the building is outside the EU)

No taxation

Transportation of persons

No taxation

Place of transportation (if in the EU)

No taxation (if the transportation takes place outside the EU)

No taxation

International transportation of goods

No taxation

Buyer's country

Place of departure (if in the EU)

No taxation (if the departure takes place outside the EU)

No taxation

Transport-related services

No taxation

Buyer's country

Place of material execution (if in the EU)

No taxation (if the material execution takes place outside the EU)

No taxation

Services in the areas of culture, arts, sports, science, education, and similar entertainment events

No taxation

Place of material execution (if in the EU)

No taxation (if the material execution takes place outside the EU)

No taxation

Work on and valuation of movable tangible property

No taxation

Buyer's country

Place of material execution (if in the EU)

No taxation (if the material execution takes place outside the EU)

No taxation

Catering services

No taxation

Place of material execution (if in the EU)

No taxation (if the material execution takes place outside the EU)

No taxation

Services of intermediaries

No taxation

Buyer's country

No taxation

Buyer's country of establishment

Short-term leasing of means of transport

No taxation

Place of provision of means of transport (if in the EU)

No taxation (if provided outside the EU)

No taxation

Long-term leasing of means of transport

No taxation

Buyer's country

Place of provision of the means of transport (if in the EU)

No taxation (if provided outside the EU)

No taxation

 

Who to contact

Double click to activate the map
Last update