Business Expense Compliance in Luxembourg

Stay up to date with rules and regulations on digital expense management in Luxembourg.

Last updated in February 2024.

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Rules and Regulations in Luxembourg

Discover rules on VAT rates, proof of payment & mileage allowance in Luxembourg.

Proof of Payment

VAT Rates

Mileage Allowance

Paperless Proof of Payment

According to the government of Luxembourg, accounting documents can be stored either in electronic format or paper format as long as they follow the general rules of double-entry accounting.

After the close of the financial year, businesses must prepare and approve their accounts in electronic format on the platform for electronic gathering of financial data (eCDF) before filing them electronically with the Trade and Companies Register (RCS).

The eCDF platform offers two possibilities to the declarant: financial data can be entered via the standardized (PDF) forms available on the eCDF platform or transferred in the form of an XML file generated by the declarant’s accounting tool.

All transactional documents must be retained for 10 years, or 5 years in case of liquidation.

Digital Proof of Payment with Klippa SpendControl

Klippa SpendControl allows employees to take pictures of the receipts and invoices or upload e-documents via email, web or mobile app.

Our user-friendly software extracts relevant document fields with 99% accuracy using Optical Character Recognition and automatically uploads data to your system.

Once submitted, authorized personnel can immediately review and approve transactions. The processed and approved data can then be booked to your accounting or ERP system using Klippa’s 20+ direct integration options.

Moreover, users can export booking data in XLSX, CSV, PDF, UBL and XML formats.

Klippa stores all archived data for a minimum of 10 years. That way, your transactional documents are always accessible for audits and tax authorities.

VAT Rates

The government of Luxembourg applies VAT rates based on the European Union’s VAT Directive. There are four VAT tariffs relevant to business expense management in 2024:

Standard VAT rate: 17% on all general goods and services

Intermediate VAT rate: 14% on certain types of wines, solid mineral fuels, mineral oils, printed advertising materials, and wood, etc.

Reduced VAT rate: 8% on gas, electricity, firewood, household appliances, shoes, leather goods, clothing, plants, bicycles, etc.

Super-reduced VAT rate: 3% on most food products, restaurant and catering services, pharmaceutical products and medical equipment, transport of passengers, books, newspapers, periodicals, etc.

Please refer to the Taxation and Customs Union for a complete list of taxable and exempted goods and services.

Automated VAT Rate Extraction with Klippa SpendControl

Klippa SpendControl automatically recognizes and extracts Luxembourgish VAT rates from all document types and uploads them to your system.

Additionally, our solution allows users to add relevant VAT rates based on company needs. Once extracted, users can book the data into their preferred accounting or ERP system.

Mileage Allowance

In Luxembourg, all employees are entitled to an allowance for travel expenses based on the distance between their home and workplace, capped at €2,574 per year, regardless of the transport used.

The tax-free allowance for using a personal vehicle for business travel in 2024, like a client visit, is set at €0.30 per kilometer by the Council Regulation.

Automated Mileage Tracking with Klippa SpendControl

Klippa SpendControl allows users to easily track and reimburse mileage expenses with the Google Maps integration.

Employees simply pick the starting and ending points of the trip, while our solution calculates distance based on the fastest route and applies a set rate.

After an expense claim is submitted, SpendControl can apply custom compensation rules, such as allowances per kilometer, based on specific users, administration, or category, and then route the data for approval to the authorized personnel.

Klippa stores all data for a minimum of 10 years, ensuring that companies can access mileage records to easily and accurately reimburse employees when necessary.