Open Joint Stock Companies (SA) and Limited Liability Companies (SARL) must:
- Maintain accounting records following the standard chart of accounts (Luxgaap);
- If the turnover is more than 100,000 euros, the accounting must be carried out using licensed IT accounting software to be able to deliver specific files, called FAIA;
- For merchants, VAT refunds must be made through the electronic collection of financial data (Collecte des données financières – eCDF);
- The VAT declaration must be filled in annually, quarterly, or monthly (depending on the volume of turnover);
- For S.A. accounts must be verified by the Commissaire au compte;
- Prepare and approve reports in electronic format on the Collecte des données financières (CDF) and then submit them electronically for publication in the Register of Commerce and Companies (RCS).
Registering for VAT
VAT (Value Added Tax) is a levy on transactions related to economic activity paid by enterprises. The enterprises give this to customers in the form of price increases.
Learn more about VAT and other taxes in Luxembourg
According to the EU VAT Directive, foreign companies that do business must register a VAT number (under certain circumstances). To declare VAT, the tax must be levied.
If a foreign company is not registered in Luxembourg but is engaged in the supply of goods or services to Luxembourg, then the company must obtain the registration of a non-resident VAT payer.
You need to obtain VAT in Luxembourg If you:
- Sale of goods to corporate or private clients from Luxembourg, which are delivered to clients outside the country;
- Buying and selling goods on the territory of the principality;
- Import of goods to Luxembourg from outside the EU;
- Selling goods electronically, subject to thresholds for VAT registration, as well as when selling goods or services remotely;
- Purchase of goods or services in Luxembourg from another EU country (intra-community purchase);
- Storage of goods in Luxembourg for sale, distribution, or consignment;
- Organization of any events in Luxembourg where participants have to pay an entrance fee.
Preliminary VAT registration documents
You need to open a bank account (postal checking account), before the registration of VAT.
To obtain a number, you must provide the following documents and information:
- Company name;
- List of activities;
- Estimated turnover per year;
- List of countries with which cooperation will be carried out;
- Data on partner companies.
You will also need the constituent documents of your company, documents confirming the legal address and appointment of the director, passport details of the director, and a signed application for obtaining a VAT number.
The Luxembourg VAT number consists of the letters “LU” and eight unique numbers.
Receiving the VAT number
You can obtain VAT in the social security administration for natural persons; or the Government IT Centre for legal persons.
Initial VAT declaration
To register as a VAT payer in Luxembourg, a person must submit an initial return or an alternative return to the tax office of the state. It can be submitted online at MyGuichet.lu or by mail.
The accounting cycle is a collective process of identifying, analyzing, and recording the accounting events of a company in Luxembourg.
8 Steps of the Accounting Cycle
The accounting cycle begins with the identification of various transactions, for example, sales, returns, etc. (transcription identification).
The next step is to write it down in the journal. Writes down the account number and various accounting transactions.
After writing the data to the journal, the accountant enters it into the general ledger.
Unadjusted Trial Balance
After the firm posts journal entries to individual general ledger accounts, an unadjusted trial balance is prepared. The trial balance ensures that total debits equal the total credits in the financial records.
The 5th step in cycling – analyzing a worksheet and identifying adjusting entries. A worksheet needs a company to make sure that debits and credits are equal. If there are discrepancies then adjustments will need to be made.
Adjusting Journal Entries
At the end of the period, the company should make the adjusting entries. These are the result of corrections made on the worksheet and the results from the passage of time.
After the posting of adjusting entries, a company prepares an adjusted trial balance according to the actual formalized financial statements.
Closing the Books
Finally, An entity temporarily accounts, for revenues, and expenses, at the end of the time using closing entries. These closing entries include transferring net income into retained earnings, a company prepares the post-closing trial balance to ensure debits and credits match and the cycle can start again.