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VAT Free Zone

Luxembourg

On 12 September 2011 the law introducing a VAT free zone was officially published by the Luxembourg government. The creation of VAT free zone is a part of Luxembourg's global strategy to develop the country's position as a key hub for multinationals through which they can operate. Taxand Luxembourg explains the benefits this can bring to businesses.

The free zone regime is essentially a suspension regime allowing the storage, sale and work on goods with limited tax obligations in terms of VAT, customs and excise duties. Certain services may also benefit from exemptions such as the storage or valorisation proceeds on goods performed within the free zone. Such a regime is particularly attractive for transactions on the commodity exchange, where goods may change owners within a short period of time.

This regime is deemed to accompany the suspension regimes existing for customs and excise duties. The payment of VAT will have to be performed once the goods exit the free zone regime. Regularisation of the temporary exemption will need to be performed in specific cases.

The new law enters into force as of the 1st day of the month following its publication, ie 1 October 2011.

Taxand's Take


In practice, the VAT free zone will be constructed by a Swiss company in the region of Findel, Luxembourg and should be fully operational at the beginning of 2013.

Multinationals wishing to take advantage of this should consider their current arrangements to see if further tax planning is required to benefit from the VAT free zone in Luxembourg.

Your Taxand contacts for queries are:
Christophe Plainchamp
T. +352 26 940 280
E. Christophe.plainchamp@atoz.lu

Mireille Rodius
T. +352 26 940 - 1
E. mireille.rodius@atoz.lu

Taxand's Take Author