On November 23rd 2017, the Luxembourg government adopted a Grand-ducal Decree (the “Grand-ducal Decree”) which abolished the Grand-ducal Decree dated January 21st 2004 regarding the VAT exemption of services supplied by independent groups of persons (“IGP”) to their members.
The object of the Grand-ducal Decree is to align the Luxembourg VAT legislation with the conclusions of the ruling of the European Court of Justice (the “ECJ”) dated May 4th 2017 (C-274/15), in which the ECJ considered the domestic implementation of the IGP exemption, as laid down in the now repealed decree, as too broad in both scope and conditions (please see our May 2017 Newsletter).
Furthermore, circular letter No. 783 dated December 7th 2017 (the “Circular”), issued by the Luxembourg VAT authorities specified that pursuant to the entry into force of the Grand-ducal Decree on December 1st 2017, the Luxembourg legislation is now fully in line with the Directive 2006/112/EC of November 28th 2006 on the common system of value added tax and that any further guidance on the interpretation of the IGP exemption by the ECJ’s case Law should be followed in the future. Moreover, the Circular indicates that the Luxembourg VAT authorities have decided to withdraw their support of a memorandum published in December 2008 by a working group within the Market Observation Committee (Comité d’observation des marchés) concerning certain issues regarding the practical implementation of the IGP exemption.
As indicated by the Luxembourg Minister of Finance in a response to a parliamentary question, the Luxembourg government is currently exploring the idea of introducing VAT grouping in the Luxembourg domestic VAT legislation, with the main aim of providing the financial and insurance sector with an alternative to the now inapplicable IGP exemption (please refer to our October 2017 Article).
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