How does the new VAT Grouping Regime apply to your business?

The VAT grouping regime has been introduced in the Luxembourg VAT legislation on 31st July 2018.

This new regime is an alternative to the cost sharing VAT exemption (independent group of persons) which is no longer applicable to the financial services industry following the judgments of the Court of Justice of the European Union. The VAT grouping regime can be used by banking groups to minimise the VAT cost on shared resources / intra-company charges between Luxembourg entities. The VAT group is, in essence a consolidation for VAT purposes. It allows multiple persons who, while legally independent, are closely bound by financial, economic and organizational links, to be regarded as one single taxable person for VAT purposes.

The implementation of a VAT group requires a careful feasibility study to:

  • accurately quantify the VAT impacts, savings, downsides at members' level;
  • precisely define the perimeter of the group and consider opt-out possibilities;
  • anticipate the operational changes in terms of accounting, documentation and systems.

A specific attention should be paid to the VAT compliance processes to ensure a smooth and efficient transition to the consolidated VAT return.

For more details on our assistance, please follow the following link .

Contact us

Frédéric Wersand

VAT Partner, PwC Luxembourg

Tel: +352 49 48 48 3111

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