What impression do you get from an invoice on which the service provider's bank details do not appear? Or an invoice showing a payment due date earlier than the delivery date of the product or service? If you are wired like me – because yes, these two examples really happened, among others – you might doubting the professionalism of the author of this invoice, right? So, let’s avoid these little setbacks that can discredit you as an entrepreneur, by following the sound advice of professionals from a fiduciary.
Why issue proper invoices?
In Luxembourg, any person, commercial structure or company subject or not to VAT must issue an invoice if they sell products or services. The style and content of your invoice enable you to:
- Have accounting documents linked to your turnover
- Specify the amount of VAT, so submitting your VAT return to the relevant authority
- Carry out procedures linked to any debt collection
To do so, your invoice must contain specific information that must not be omitted and depends on the recipient (B2B or B2C).
Checklist: the essential elements to mention
- The company or service provider must obviously be identifiable. To this end, indicate each of the elements below:
- The trade name and the business name
- The legal form
- The address of the headquarters
- Your professional title and business licence number
- Your RCS/LBR identification number
- Your LU intra-community VAT number
- The sold products or provided services must be clearly described, quantified and their unit price (excluding VAT) mentioned
- Your client must also be identified
- Don’t forget the date of the sale or of the provided services, as well as the date the invoice was issued
- The invoice number which allows you to uniquely identify the issued invoice
- The due date which lets the client know when payment is expected
Your client’s identification
In B2B: if your client is a professional
A Luxembourger client company with headquarters in Luxembourg (so subject to Luxembourger VAT) must simply be stated as the recipient of the invoice (trade name, legal form and address).
A foreign client company (outside of the Grand Duchy of Luxembourg) must be precisely stated: trade name, business name, legal form, address of its headquarters, intra-community VAT number.
The intra-community VAT number is specific to each country. It is composed of the country code (for example, LU in Luxembourg, FR in France, BE in Belgium…) and a series of digits. Intra-community VAT numbers are unique and are issued to each company by the tax administration of the country in which the business is located. This number is crucial for B2B transactions between two foreign companies because their applicable VAT is at 0%. The validity of a European intra-community VAT number can be checked here.
In B2C: if your client is a private individual
Their personal identification must be stated (surname, name, address) and the VAT rate is still applicable. Stating the client’s information is important, especially if you have to enforce a debt recovery procedure.
Actions that can be taken in the event of non-payment
The concept of an agreed upon invoice
As a matter of principle, any invoice which isn’t disputed within a short period of time (case law indicates 4 to 8 weeks) is deemed to be agreed upon by the client who received the invoiced service and/or product.
Payment due dates
- If your issued invoice doesn’t have a payment due date, the payment deadline is the 30th day following reception of the merchandise or of the service provided.
- Any missed payment deadline, whether it’s stated or not, can lead to a debt recovery procedure with the additional charge of the legal interest rate for non-payment.
- If the legal interest rate for non-payment is not stated on your invoice, it is still applicable and can be determined as follows:
- If your client is a professional (B2B): the applicable legal interest rate is set by the European Central Bank and published in Memorial B each semester (it was 8% during the second half of 2022).
- If your client is a consumer, a private individual (B2C): the applicable legal interest rate is set by the Grand Ducal Regulation and published in Memorial A (in FR) every year.
Appeals procedures in Luxembourg
Once the missed payment has been identified, the cheapest and most efficient appeals procedure is to present your case to a Justice of the Peace or the competent district court (according to the debtor’s headquarters or address, but in this case, they must be a resident of Luxembourg).
Appealing to a Justice of the Peace:
- The amount due must be under 15,000€
- The client can be a professional or a private individual
- It’s best to have already sent reminders and formal notice for the amount due
- You need to be able to provide evidence of the debt, mainly thanks to a proper issued invoice
The appeals form for a Justice of the Peace can be downloaded (in French) here.
Appealing to a district court:
The amount due must be over 15,000€. The creditor can ask the district court to summon the debtor who will then appear before them. The district court will then make a final ruling. The information and forms are available (in French) here.
Now you are ready to issue perfect invoices!
We recommend that you contact a fiduciary if you want more details. nyuko can put you in touch with experts if necessary. Do not hesitate to contact us and ask your nyuko coach!
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