The necessary explanations are provided by bulletin No 812 issued by the Registration Duties, Estates and VAT Authority. This bulletin deals with the temporary reduction of the different rates, but in the end, the reduction of VAT from 17 % to 3 % for the solar panels is to be considered alike.
By way of additional information, here are some examples below.
Deliveries of goods, other than new modes of transport, and provisions of services
There is reason to distinguish between deliveries and services performed in the B2B/B2G sector and those made in the B2C sector.
A. For deliveries of goods/provisions of services relating to B2B (Business to Business, i.e. the customer is subject to VAT) and B2G (Business to Government, i.e. the customer is a legal person not subject to VAT), there is an obligation to issue an invoice for the delivery / service performed as well as for the instalment payments.
Attention: the customer to whom the work is invoiced that can benefit from the super-reduced VAT rate as part of the said “housing VAT” is, even if this relationship appears to be B2C (business to consumer), for the purposes of the “housing VAT” only provisions considered as being subject to VAT.
If a delivery is made, the applicable rate of VAT is that in force:
- on the 15th day of the month following the delivery of goods / provision of service;
- on the day when the invoice is issued, if it is issued before this date.
If instalments are paid, the applicable rate of VAT is that in force:
- on the day the instalment paid is received;
- on the day when the invoice is issued, if it is issued before the instalment is received.
As a result, the following cases may apply:
- the goods are delivered / the service is performed in 2022 and invoiced in 2022: rate of 17 %
- the goods are delivered / the service is performed in December 2022 and invoiced in 2023: rate applicable in 2023 up to 15 January, thus of 3 %
- the goods are delivered / the service is performed in 2023 and invoiced in 2023: rate of 3 %
- an instalment for the delivery / service not yet carried out is invoiced in 2022 and paid in 2022: rate of 17 %
- an instalment for the delivery / service not yet carried out is invoiced in December 2022 and paid in 2023: rate of 17 % (date of the invoice)
- an instalment for the delivery / service not yet carried out is paid in 2022 and invoiced in 2023: rate of 17 % (date of receipt)
- an instalment for the delivery / service not yet carried out is invoiced in 2023 and paid in 2023: rate of 3 %
B. For the deliveries and services performed in the B2C sector (business to consumer, the customer is neither subject to VAT, nor a non-taxable legal person), there is no obligation to issue an invoice either for the delivery / service itself (only exception, certain sales called “distance sales”, or for an instalment paid before the delivery / service has been performed.
If a delivery / service is performed, the applicable rate of VAT is that in force on the day when the delivery / service is performed (completed) (operative event).
If instalments are paid, the applicable rate of VAT is that in force on the day the instalment paid is received.
As a result, the following cases may apply:
- the delivery / service is performed in 2022 (and invoiced in 2022): rate of 17 %
- the delivery / service is performed in December 2022 (and invoiced² in 2023): rate of 17 %
- the delivery / service is performed in 2023 (and invoiced in 2023): rate of 3 %
- an instalment for the delivery / service not yet carried out is (invoiced² in 2022 and) paid in 2022: rate of 17 %
- an instalment for the delivery / service not yet carried out is (invoiced² in December 2022 and) paid in 2023: rate of 3 % (date of receipt)
- an instalment for the delivery / service not yet carried out is paid in 2022 (and invoiced² in 2023): rate of 17 % (date of receipt)
- an instalment for the delivery / service not yet carried out is (invoiced² in 2023 and) paid in 2023: rate of 3 %.
Taking into account the instalment(s) when delivering goods or providing services
As far as taking into account the instalment when solar panels are installed:
Quotation 2022 : |
€ 42.735,04 excluding VAT |
€ 7.264,96 VAT at 17 % |
Total : |
€ 50.000,00 including tax |
Instalment of EUR 15,000 paid in 2022: |
€ 12.820,51 excluding VAT |
€ 2.179,49 VAT at 17 % |
Installation carried out in 2023: |
€ 42.735,04 excluding VAT |
€12.820,51 instalment excluding VAT paid in 2022: |
€ 29.914,53 EUR balance excluding VAT to be paid in 2023 |
€ 897,43 EUR VAT 3 % |
€ 30.811,96 Balance to be paid |
A simple accounting reversal of the instalment has no influence on the rate that was applicable at the time when it was received or invoiced (according to the cases listed above). The only way of “reversing” the VAT due because of an invoiced/received instalment would be to reimburse the amount received to the customer.
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1 Annex B, points 21° and 22°, of the law amended on 12 February 1979 regarding value added tax and the grand-ducal regulation of 30 July 2002 regarding the application of value added tax on the allocation of housing for use as the principal dwelling and to original and renovation work carried out in the interest of the affected housing for use as the principal dwelling and fixing the conditions and execution methods relating to this
2 Commercial invoice, without impact relating to VAT.