VAT, reverse charge and invoicing for freelancers in Luxembourg

You've just landed your first freelance assignment in Luxembourg? Congratulations. Before you even think about delivering the project, a very concrete question arises: how do you invoice your client correctly? Invoicing is the first real administrative obligation freelancers face, and VAT sits at the heart of it. VAT number, exemption scheme, applicable rates, reverse charge for European clients, mandatory mentions: this practical guide covers what every self-employed professional needs to know to invoice with confidence in the Grand Duchy.

Invoicing: the freelancer's first concrete obligation

When you go independent, you tend to focus first on legal status or prospecting. But as soon as the first assignment is signed, it is the invoice that makes your activity real: it triggers payment, serves as accounting evidence and forms the basis of your tax returns. A poorly drafted invoice can delay settlement or create problems in the event of an audit.

In Luxembourg, invoicing is closely tied to VAT. Before issuing your first invoice, you therefore need to know which regime you fall under: exemption scheme or standard regime. First step: registration.

Registering for VAT with the AED

In Luxembourg, VAT is administered by the Administration de l'enregistrement, des domaines et de la TVA (AED). Anyone who carries on an economic activity independently and on a habitual basis is considered a taxable person for VAT and must register with this administration.

In practice, registration is done through an initial declaration to the AED, in which you describe your activity, legal form and expected turnover. At the end of this process, you receive your VAT identification number, which must appear on all your invoices and also serves as your intra-EU VAT identifier for clients established in other European Union countries.

Procedures, forms and detailed explanations are available on the official portal guichet.public.lu, which centralises all administrative procedures for businesses and self-employed professionals in Luxembourg.

The VAT exemption scheme: simplicity for small turnovers

Luxembourg provides an exemption scheme for small businesses: since 1 January 2025, if your annual turnover generated in Luxembourg does not exceed €50,000 (threshold unchanged in 2026, according to the indirect tax portal, in French), you can benefit from the VAT exemption. In that case, you do not charge VAT to your clients and, in principle, you do not have to file periodic VAT returns (see the reverse charge exception below). Exceeding the threshold by up to 10% (i.e. €55,000) is tolerated for the current year; beyond that, the exemption ends from the day after the threshold is exceeded.

Be careful, though: exemption does not mean no obligations. You must still register with the AED, and your invoices must carry the mention “TVA non applicable – Article 57bis de la loi modifiée du 12 février 1979” (VAT not applicable). You must also inform the AED in writing, before 1 March, of the turnover generated in Luxembourg in the previous year.

Advantages of the exemption scheme

• Administrative simplicity: no VAT returns to prepare, and no VAT to collect and remit.
• Attractive pricing for private clients: non-taxable clients pay a price without VAT, which can be a competitive advantage.
• Ideal for getting started: if you are launching your activity alongside employment or testing the market, the exemption lightens your administrative load.

Limits of the exemption scheme

• No deduction of input VAT: you cannot recover the VAT paid on your business purchases (equipment, software, services). If you invest heavily, the exemption can cost you more than it saves.
• Threshold quickly reached: for an IT freelancer billing at a daily rate (TJM), the €50,000 annual turnover threshold is crossed within a few months of full-time work.
• No advantage in B2B: for a business client, VAT is neutral because they deduct it. The exemption therefore brings no pricing advantage when dealing with professional clients.

In practice, most IT freelancers in Luxembourg quickly exceed this threshold and move onto the standard regime.

The standard regime: Luxembourg VAT rates

If your turnover exceeds the exemption threshold, or if you voluntarily opt out of the scheme, you apply the standard regime: you charge VAT to your clients, remit it to the AED and deduct the VAT paid on your professional expenses.

Luxembourg applies four VAT rates:

• 17 %: the standard rate, which applies by default to most goods and services.
• 14 %: the intermediate rate, reserved for certain specific categories.
• 8 %: the reduced rate, applicable to certain goods and services defined by law.
• 3 %: the super-reduced rate, for certain essential products and services.

Good news for simplicity: IT services, development, consulting and, more generally, intellectual services provided by IT freelancers generally fall under the standard rate of 17 %. In the vast majority of cases, you will therefore only have one rate to manage. If in doubt, contact the AED or a chartered accountant.

Reverse charge (autoliquidation): invoicing a client in another EU country

The Luxembourg market is international by nature: it is very common for a freelancer based in the Grand Duchy to invoice clients in France, Belgium, Germany or elsewhere in the European Union. In most of these cases the reverse charge mechanism (autoliquidation in French) applies: you invoice without VAT, and your client accounts for the VAT in its own country.

The general rule for B2B services

Two articles of Directive 2006/112/EC set up the mechanism:

• Article 44: a service supplied to a taxable person (a business client) is taxable where that client has established its business. A development assignment carried out for a French company is therefore taxable in France, even if you work from Luxembourg.
• Article 196: when the supplier is not established in that country, VAT is payable by the taxable client receiving the service. The client "self-assesses" the tax in its own VAT return and, as a rule, deducts it in the same return.

In Luxembourg law, these rules are found in the amended law of 12 February 1979 on VAT (consolidated text as at 1 January 2026): Article 17(1)(b) for the place of supply, and Article 61(5), which makes the client liable for the tax when the supplier is not established in the country. Some services follow special place-of-supply rules (services connected with immovable property, for instance), but typical development, consulting, project management or data assignments fall under the general rule.

Conditions to check before applying the reverse charge

• Your client acts as a taxable person: a company, a self-employed professional, or a VAT-registered non-taxable legal person, buying the service for its business.
• It is established in another member state, not in Luxembourg. If the client is established in Luxembourg, you charge Luxembourg VAT as usual.
• Its VAT number is valid: check it on VIES, the European Commission's tool, before the first invoice and regularly afterwards. If you enter your own VAT number as the requester, VIES gives you a consultation number: keep it with the invoice.

Without a valid VAT number, you have no evidence that your client is acting as a taxable person: the transaction may then be treated as a supply to a private individual, subject to Luxembourg VAT.

What the invoice must show

The invoice remains subject to Luxembourg invoicing rules (Article 63 of the VAT law). On top of the usual details listed below, a reverse charge invoice includes:

• the mention "Autoliquidation", required by Article 63(8), point 14° of the VAT law (Article 226, point 11a of the Directive). You can add "Reverse charge" for a client who does not read French;
• your Luxembourg VAT identification number (LU followed by 8 digits);
• your client's VAT identification number, under which it receives the service;
• the amount excluding VAT, with no VAT amount;
• the date or period of the service, if it differs from the issue date.

The invoice must be issued no later than the 15th day of the month following the month in which the service was supplied (Article 63(5) of the VAT law).

The recapitulative statement (EC Sales List) filed with the AED

Every service invoiced under the reverse charge to a client in another member state must also be reported in a recapitulative statement, the état récapitulatif (Article 64bis of the VAT law; Articles 262 and 263 of the Directive). According to Guichet.lu:

• it shows, for each client, the country code, the client's VAT number and the total amount in euros of services supplied during the period;
• it is monthly in principle, but for services you are free to file it quarterly instead, without any prior request to the administration;
• it must be filed before the 25th day of the month following the period;
• it must be filed electronically, on the eCDF platform.

The amount of these services also appears in your VAT return (Article 64(2)). The statement allows the tax authorities of the member states to match your return against your client's.

The reverse situation: you receive an invoice from a foreign supplier

You use a subcontractor established in France, or you pay a software subscription to a company established in Ireland or the United States: the invoice reaches you without VAT, with a reverse charge mention. You are then liable for Luxembourg VAT on that service (Article 61(5) of the VAT law):

• you declare the VAT at the applicable Luxembourg rate (17% for most services) in your VAT return;
• under the standard regime, you deduct it in the same return, within the limits of your right to deduct: for an IT freelancer, the operation is usually neutral;
• you give your Luxembourg VAT number to the supplier, so that it can apply the reverse charge on its side.

Clients established outside the European Union

For a business client established in Switzerland, the United Kingdom or the United States, the same place-of-supply rule applies (Article 17(1)(b)): the service is taxable in the client's country, and therefore outside the scope of Luxembourg VAT. You invoice without VAT and state the reason, for example "Opération non soumise à la TVA luxembourgeoise – article 17, paragraphe 1er, lettre b) de la loi TVA" (transaction not subject to Luxembourg VAT). Keep evidence that your client is a business (company register extract, tax number). No recapitulative statement is needed, as it only covers clients registered for VAT in the EU, but the amount does appear in your VAT return. Any tax due in the client's country is governed by its national law: have it checked for significant contracts.

Private clients (B2C)

If your client is not a taxable person, the reverse charge does not apply. The general rule (Article 17(1)(c)) places the service in Luxembourg: you charge Luxembourg VAT at 17%, even if the private individual lives in France or Belgium. Two exceptions often concern IT freelancers, according to the indirect tax portal (in French):

• so-called "intangible" services (consulting, engineering, IT, data processing, etc.) supplied to a private individual established outside the EU are taxable in that person's country, and therefore without Luxembourg VAT;
• electronically supplied services to private individuals in the EU (online software sold on subscription, for example) are taxable in the client's country, with their own procedures (the OSS one-stop shop). Look into this before selling that kind of service.

What if you are under the VAT exemption scheme?

Since 1 January 2025, the threshold for the national exemption scheme has been €50,000 of annual turnover generated in Luxembourg (Article 57bis of the VAT law, unchanged as at 1 January 2026). The exemption only covers transactions taxable in Luxembourg: it does not take you outside the reverse charge rules.

• Service to a business client in another member state: the transaction is taxable in the client's country, and the client self-assesses the VAT. You must report this type of transaction to the AED and you are identified by a VAT number (Article 62(2) and (5) of the VAT law). Your invoice shows both VAT numbers and the mention "Autoliquidation", and you file the recapitulative statement. The mention "TVA non applicable – Article 57bis" is reserved for transactions taxable in Luxembourg.
• Service bought from a foreign supplier: you are liable for Luxembourg VAT on that service (Article 61(5)) without being able to deduct it, since an exempt small business has no right to deduct (Article 57bis(5)). For a software subscription, this VAT becomes a cost.
• VAT return: an exempt small business does not have to file VAT returns, unless during the year it supplied services for which a client in another country is liable for the tax, or it is itself liable for VAT, for example on a service received from abroad (Article 57bis(4)).

Summary of the cases

Template: invoice details for a reverse charge invoice

Fictitious example for an assignment invoiced to a company established in France:

Invoice no. 2026-042 — issue date: 31 October 2026

Supplier: [Your name], [address], L-[postcode] [town], Luxembourg — VAT no.: LU12345678

Client: [Company name], [address], [postcode] [city], France — VAT no.: FR12345678901

Service: software development, 20 days, 1 to 31 October 2026 — day rate excl. VAT: €700.00

Total excl. VAT: €14,000.00 — VAT: €0.00

Autoliquidation (reverse charge) — VAT payable by the recipient, Article 196 of Directive 2006/112/EC

Total due: €14,000.00 — payment term: 30 days — IBAN: [your bank details]

These rules cover the usual situations. For your first cross-border invoice or an unusual set-up (chains of subcontractors, a client with several establishments), have your approach confirmed by the AED or a chartered accountant.

Mandatory mentions on a Luxembourg invoice

Whatever your situation, a compliant invoice must include a core set of mandatory mentions. Here is the checklist to review before each send:

• Your full identity: name or company name, address of your establishment.
• Your client's identity: name or business name and address.
• Your VAT number and, for intra-EU transactions, your client's.
• The issue date of the invoice and, if different, the date of the service.
• A unique sequential number: your invoices must follow continuous numbering, with no gaps or duplicates.
• Description of the service: nature of the services, quantity or number of days, period covered.
• The price excluding tax (HT), broken down by line where applicable.
• The VAT rate and amount, or the applicable exemption mention (exemption scheme, reverse charge, out-of-scope transaction).
• Payment terms: deadline, bank details, any late-payment penalties.

A practical tip: create a complete invoice template from the start, or use invoicing software that handles automatic numbering. You will avoid omissions and save valuable time.

VAT returns: frequency and online filing

If you are under the standard regime, you must file periodic VAT returns with the AED. The frequency — monthly, quarterly or annual — depends on your turnover: the higher it is, the more frequent your returns. In all cases, an annual recapitulative return closes the financial year.

Filing is done online via the official electronic platforms. Plan ahead: the VAT collected from your clients does not belong to you. Set it aside in a dedicated account as soon as you receive payment, so you are never short when the time comes to remit it.

Invoicing best practices for sound cash-flow management

Beyond compliance, invoicing is a tool for steering your cash flow. A few habits worth adopting:

• Invoice quickly and regularly: issue your invoices as soon as the month or agreed milestone ends. Every day of delay in issuing is an extra day before payment.
• Set clear payment terms: a 30-day term is standard practice in B2B. Spell it out in black and white in your contracts and on your invoices.
• Request deposits: for fixed-price projects or long assignments, a deposit at kick-off secures your commitment and tests the client's reliability.
• Follow up without delay: a polite reminder as soon as the due date is passed, then more formal follow-ups. Consistent chasing makes all the difference.
• Keep your invoices for 10 years: issued and received invoices must be archived and available in the event of an audit. Digital archiving by year and by client will make life easier.
• Set the right rate: for a daily rate consistent with your real costs and cash flow, use our Luxembourg TJM simulator.

Conclusion: invoice cleanly, grow with confidence

VAT and invoicing in Luxembourg are not that complex once the basics are in place: registration with the AED, choosing between the exemption scheme (up to €50,000 turnover generated in Luxembourg) and the standard 17% regime for IT services, reverse charge for your European B2B clients, and discipline on mandatory mentions. By structuring your invoicing from the start, you gain credibility with clients and protect your cash flow.

To go further on legal status, social contributions and every step of launching, see our complete guide to freelancing in Luxembourg. And to find your next assignments in the Grand Duchy, take a few minutes to create your profile on Freelancers.lu: it is free, and companies contact you directly.