Beyond Compliance: Understanding Luxembourg's e-invoicing complexity

Luxembourg has taken a further step in the digitalisation of invoicing processes with the publication, on 30 July 2026, of a draft bill amending the law of 16 May 2019 on electronic invoicing. The reform would extend the existing electronic invoicing framework beyond the B2G (i.e. Business-to-Government) domestic transactions and extend mandatory structured electronic invoicing for B2B domestic transactions.

This reform is part of a broader move towards digital VAT compliance and is consistent with the objectives pursued at EU level under the VAT in the Digital Age initiative. In practice, it will require businesses to revisit not only the technical format of their invoices, but also their invoicing workflows, ERP capabilities, data quality, internal controls and VAT compliance processes and the supporting legal documentation governing their transactions.

Below is a concise overview of the scope, timeline and key actions businesses should consider. 

Structured e-invoices will become the only legally valid format for certain domestic B2B transactions.

The draft bill modernises the current Luxembourg e-invoicing framework, which was initially focused on business-to-government (B2G) invoices, by extending the use of compliant structured electronic invoices to certain domestic B2B transactions falling within the scope of the law.

For in-scope transactions, traditional formats such as paper invoices, PDF invoices or other electronic formats that do not qualify as compliant structured electronic invoices will no longer represent the legally valid invoicing format. The draft bill expressly provides that only the compliant electronic invoice will prevail, and that any attachment or non-compliant electronic version accompanying the compliant electronic invoice will not be considered as an invoice itself.

A compliant electronic invoice must meet the European standard (EN 16931) for electronic invoicing and use one of the syntaxes published in the Official Journal of the European Union. The draft bill mentions that certain rules will be detailed through a Grand-Ducal Regulation. It is expected that the same common delivery network currently used for B2G will apply for the domestic transactions covered in the draft bill. Hence, the issuance, transmission and receipt of electronic invoices should be made through Peppol, managed and maintained by OpenPeppol.

This reform is therefore not merely a technical change, it directly impacts VAT compliance, invoicing processes, master data, ERP configuration, accounts payable and accounts receivable workflows, and the way businesses evidence and control their invoicing chain.

Applies to domestic B2B transactions where both entities are established in Luxembourg.

The draft bill targets domestic transactions where the supplier and the customer are both established in Luxembourg, provided that the transaction relates to supplies of goods or services whose place of taxation is in Luxembourg and for which an invoicing obligation exists under the Luxembourg VAT law (i.e. domestic taxable B2B transactions for which a VAT invoice must be issued under Luxembourg VAT law).

The draft bill also provides for specific exclusions where invoices are issued by, or to, certain persons covered by specific provisions of the Luxembourg VAT law. These exclusions should be analysed carefully in practice, as the scope assessment will depend on the status of the parties and the VAT treatment of the transaction.

In particular, the rules do not apply to:

• Transactions performed by suppliers not established or not VAT registered in Luxembourg.
• Persons subject to specific or limited VAT regimes, including those considered taxable only on an occasional basis or due to or regulatory considerations  (e.g. supply of new means of transport on an occasional basis).
• Transactions that are VAT-exempt under Luxembourg VAT law.
• Certain specific transactions or public contracts subject to specific legal frameworks or international arrangements.

In short, businesses should assess the implications on a transaction-by-transaction basis by considering the following aspects:

• Whether the issuer is established in Luxembourg.
• Whether the recipient is established in Luxembourg.
• Whether the transaction is deemed performed in Luxembourg for VAT purposes.
• Whether the transaction gives rise to an invoicing obligation under Luxembourg VAT law.
• Whether a specific exclusion applies. 

Start date: 1 January 2028 with phased implementation depending on company size.

The draft bill introduces a gradual implementation for domestic B2B electronic invoicing, with a distinction between the obligation to receive and process electronic invoices and the obligation to issue and transmit electronic invoices. 

^{* The use of an alternative solution during the transitory phase is subject to a usage fee if the De Minimis threshold is exceeded – See the section "Simplified alternatives and usage limits" for more details}

As a general principle, the obligation to receive and to issue electronic invoices would apply as from 1 January 2028. From that date, businesses must be capable of receiving compliant structured electronic invoices through the Common Delivery Network, subject to certain temporary reception-related transitional measures.

The obligation to issue electronic invoices is phased in according to company size (although the use of alternative methods will be possible with no time limit):

• Large enterprises must issue electronic invoices from 1 January 2028. 

• Medium enterprises benefit from a deferred implementation and must issue electronic invoices from 1 July 2028.
• Small enterprises benefit from a longer deferral and must issue electronic invoices from 1 January 2029.

For recipients, alternative methods will be available temporarily until 30 June 2028 for medium enterprises and until 31 December 2028 for small enterprises, after which the Common Delivery Network becomes mandatory.

Only available in limited cases and subject to thresholds.

The draft bill provides for the implementation of alternative technical solutions in certain circumstances, notably for operators that do not yet have the capability to issue and transmit electronic invoices through the common delivery network, and for certain issuers or recipients with a very limited number of in-scope invoices.

Where an issuer or recipient exceeds the number of transactions, which will be set by the expected Grand-Ducal Regulation, a usage fee would become payable per transaction exceeding the threshold. The draft bill provides for a progressive fee of EUR 2 excluding VAT for each of the first 20 transactions above the threshold, EUR 3 excluding VAT for each of the next 30 transactions, EUR 4 excluding VAT for each of the next 50 transactions, and EUR 5 excluding VAT for any additional transaction beyond those 100 transactions.

The de minimis regime appears to be a permanent simplification measure available to issuers and recipients with very limited invoice volumes, provided the applicable thresholds are respected. While the use of alternative methods for small and medium-sized enterprises will be available without any time limit, this will not be the case for the receipt of electronic invoices which appear to be expressly temporary for medium and small-sized enterprises during the transition period (until 30 June 2028 or 31 December 2028 respectively).

A common delivery network will be used for electronic invoicing.The draft bill provides that the issuance, transmission and receipt of electronic invoices must take place through a single common delivery network, which will be designated by a Grand-Ducal Regulation. At this stage, no new Grand-Ducal Regulation has been published for the future domestic B2B e-invoicing framework. However, under the current e-invoicing framework applicable to public procurement and concession contracts, the Grand-Ducal Regulation of 13 December 2021 designates the Peppol network as the common delivery network for the exchange of electronic invoices.

Peppol (Pan-European Public Procurement OnLine) is an international interoperability framework that enables businesses and public bodies to exchange structured electronic business documents through a common set of technical standards and protocols. Rather than sending invoices directly between trading partners, participants exchange documents through certified Peppol Access Points, ensuring a secure and standardized transmission process.

More details will be shared upon publication of the expected Grand-Ducal Regulation. 

Businesses should start assessing impact on ERP, processes and VAT compliance

Businesses should start preparing by assessing whether their transactions fall within the scope of the new rules and by mapping their role in the invoicing chain — issuer, recipient, or both. This distinction is important because the implementation timeline and the available transitional measures differ between receipt and issuance.

Companies should also review whether their ERP, billing and accounts payable systems can generate, transmit, receive and process compliant structured electronic invoices in line with the European standard and the designated delivery network. They should also assess whether their current invoice data contains all information required for compliant e-invoicing, including the structured invoice data required for compliant e-invoicing and the mandatory invoice mentions required under VAT law.

Finally, companies should determine whether they intend to connect to Peppol directly or through a service provider, or whether they may temporarily rely on the alternative solutions (to be determined by the expected Grand-Ducal Regulation). In doing so, businesses will have to consider the volume thresholds and potential usage fees applicable to alternative solutions.

Early assessment will allow businesses to anticipate IT developments, avoid operational disruption and approach compliance in a structured manner.

Mandatory electronic invoicing marks a fundamental shift in how VAT compliance, invoicing processes and digital reporting will operate in Luxembourg. Invoices will no longer be simple documents exchanged between parties, but structured data objects at the heart of VAT compliance, auditability and digital reporting.

Businesses that act early will be better positioned to manage the transition efficiently, secure internal alignment between tax, finance and IT, and reduce the risk of disruption when the new rules become applicable.