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27.6 VAT Returns: Monthly, Quarterly, Annual Cycles

Understanding VAT Returns​

A VAT return (Déclaration TVA) is a periodic report filed with tax authorities showing:

  • Output VAT: VAT collected on sales
  • Input VAT: VAT paid on purchases
  • Net VAT: Amount payable or refundable

Filing Frequency​

Filing frequency depends on your annual taxable turnover:

Annual TurnoverFiling FrequencyDue Date
Over €112,000Monthly15th of following month
€35,000 - €112,000Quarterly15th of month following quarter end
Below €35,000Annual (if eligible)Same as annual tax return

Monthly Filing​

When Required​

  • Annual turnover exceeds €112,000
  • Tax authorities may require monthly filing for other reasons

Due Dates​

  • Filing: By 15th of following month
  • Payment: By 15th of following month
  • Example: January VAT return due by February 15

Advantages​

  • Regular Cash Flow: More frequent VAT payments
  • Smaller Payments: Spread payments throughout year
  • Better Control: More frequent monitoring of VAT position

Disadvantages​

  • More Administrative Work: 12 returns per year
  • More Time: More frequent calculations and filing
  • Higher Costs: More accounting time required

Quarterly Filing​

When Required​

  • Annual turnover between €35,000 and €112,000
  • Most common filing frequency for SMEs

Due Dates​

  • Q1 (Jan-Mar): Due by April 15
  • Q2 (Apr-Jun): Due by July 15
  • Q3 (Jul-Sep): Due by October 15
  • Q4 (Oct-Dec): Due by January 15

Advantages​

  • Balanced: Good balance between frequency and administrative burden
  • Manageable: 4 returns per year
  • Reasonable Payments: Quarterly payments are manageable

Disadvantages​

  • Larger Payments: Quarterly amounts can be significant
  • Less Frequent Monitoring: Less frequent review of VAT position

Annual Filing​

When Available​

  • Annual turnover below €35,000
  • Must be approved for annual filing
  • May require advance payments

Due Dates​

  • Filing: Same as annual tax return (usually 7 months after year-end)
  • Advance Payments: Quarterly advance payments may be required

Advantages​

  • Minimal Administration: Only 1 return per year
  • Low Cost: Minimal accounting time
  • Simple: Easiest to manage

Disadvantages​

  • Large Payment: Annual payment can be significant
  • Less Control: Less frequent monitoring
  • Advance Payments: May need to make quarterly estimates

VAT Return Calculation​

Step 1: Calculate Output VAT​

  • Sum all VAT collected on sales for the period
  • Include all taxable sales
  • Use correct VAT rates

Example:

  • Sales at 17%: €10,000 × 17% = €1,700
  • Sales at 14%: €5,000 × 14% = €700
  • Sales at 8%: €2,000 × 8% = €160
  • Total Output VAT: €2,560

Step 2: Calculate Input VAT​

  • Sum all VAT paid on purchases for the period
  • Include only recoverable VAT
  • Exclude personal expenses

Example:

  • Purchases at 17%: €6,000 × 17% = €1,020
  • Services at 17%: €1,000 × 17% = €170
  • Total Input VAT: €1,190

Step 3: Calculate Net VAT​

  • Net VAT = Output VAT - Input VAT

Example:

  • Output VAT: €2,560
  • Input VAT: €1,190
  • Net VAT Payable: €1,370

Step 4: File Return​

  • Complete VAT return form
  • File through eCDF system
  • Pay net VAT due

VAT Refunds​

If Input VAT > Output VAT, you are entitled to a refund:

Example:

  • Output VAT: €500
  • Input VAT: €1,200
  • VAT Refund: €700

Refund Process:

  • File VAT return showing refund
  • Tax authorities process refund
  • Refund received within 4-6 weeks

Late Filing and Payment Penalties​

Late Filing​

  • Penalty: €250 - €2,500
  • Interest: Charged on unpaid VAT
  • Additional Penalties: For repeated late filing

Late Payment​

  • Interest: Charged on overdue amounts
  • Penalty: Additional penalty for late payment
  • Collection Action: For persistent non-payment

Luxembourg Compliance Note​

Critical Requirements:

  • File on time: Late filing results in penalties
  • Pay on time: Late payment results in interest and penalties
  • Accurate calculations: Errors can trigger audits
  • Keep records: Maintain supporting documentation
  • eCDF filing: Must file electronically through eCDF

Best Practices:

  • Set up calendar reminders for filing dates
  • Prepare returns in advance
  • Review calculations before filing
  • Keep all supporting documents
  • Consult accountant if uncertain

Think It Through​

Marie's restaurant has €80,000 annual turnover. She files quarterly VAT returns. In Q2, she had large equipment purchases, resulting in more input VAT than output VAT. How should she handle this situation? What are her options?

Concepts in Practice​

Quarterly VAT Return

Le Petit Bistro Q2 VAT return:

Output VAT (Sales):

  • Food sales: €20,000 × 17% = €3,400
  • Wine sales: €5,000 × 14% = €700
  • Total Output VAT: €4,100

Input VAT (Purchases):

  • Food purchases: €12,000 × 17% = €2,040
  • Equipment: €5,000 × 17% = €850
  • Utilities: €1,000 × 17% = €170
  • Total Input VAT: €3,060

Net VAT:

  • Output VAT: €4,100
  • Input VAT: €3,060
  • Net VAT Payable: €1,040

Marie files return by July 15 and pays €1,040 by July 15.