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Luxembourg for Logistics

AUTHORIZED ECONOMIC OPERATOR
Acknowledging the increase of potential security threats in the international movement of goods, the European Union saw a need for securing the global supply chains. There is no obligation for a company to be certified as an Authorized Economic Operator (AEO), yet the idea was to grant to proven reliable and trustworthy operators a status that identifies them as “secure”.
Authorized Economic Operator
An AEO can be defined as an economic operator who has proven to be reliable in his customs related operations, and, therefore, is entitled to enjoy certain benefits throughout the European Union territory.
Depending on the level of certification, an AEO will benefit from the following advantages:

  • Easier admittance to customs simplifications
  • Fewer customs controls
  • Priority treatment if selected for controls
  • Reduced data set for summary declaration

Levels of Authorized Economic Operator certification
There are three levels of AEO certifications:

  1. Customs Simplifications certification which allows an economic operator to benefit from simplified clearance
    procedures;
  2. Security and Safety certification which recognizes an economic operator as a lower risk operator;
  3. Combined Customs Simplifications / Security and Safety certification.

Who can become an Authorized Economic Operator?
Application is open to all economic operators established in the EU and linked to the supply chain such as manufacturers, importers, exporters, transporters, freight forwarders and carriers who fulfil the criteria for obtaining the status.
There is no obligation for economic operators to become an AEO, it is a matter of the operators’ own choice based on their specific situation. Nor is there any obligation for AEOs to require that their business partners also have AEO status.

Where to submit the Authorized Economic Operator application
Economic operators (individual legal entities) who would like to apply for the AEO status should apply to the customs administration in the place where the main accounts are kept.
In Luxembourg please contact:
Direction des Douanes et Accises
BP 1605 / L-1016 Luxembourg
Tel.: (+352) 29.01.91-221 / Fax: (+352) 29 22 89
aeo@do.etat.lu
For more information :
www.do.etat.lu/douanes/oea

DEDICATED LOGISTICS PARKS
The Ministry of the Economy and Foreign Trade has developed and owns logistics parks in the immediate vicinity of the
Luxembourg Airport (Eurohub Centre) and of major railway and highway corridors (Eurohub South).
Focus on value added logistical services
Only value added logistical activities that have a strong international market orientation are admitted to the Eurohub infrastructure such as:

  • Third Party Logistics (3PL): warehousing, handling, packaging, processing and shipping operations;
  • Fourth Party Logistics (4 PL): organization of production and distribution flows, supply chain management,
    invoicing services;
  • Reverse logistics: handling of overstocks, recovery, recycling and reselling of non-sold products.

EUROHUB CENTRE (Dedicated to air-freight logistics)
18 hectares, Close to Airport and Aircargo handling facilities

EUROHUB SOUTH (primarily rail-freight logistics)
50 hectares, Rail/Road interface, Piggy back facility, Container port

FISCAL REPRESENTATION

With effect from January 1 , 2008, the Luxembourg Government has introduced the system of fiscal representation for VAT purposes for importers, neither established, nor VAT registered in the country. This system allows foreign traders to appoint a third party in Luxembourg to carry out the necessary VAT formalities and to pay the VAT due in Luxembourg on their behalf.

Who can apply?
Foreign traders (established in or outside the EU) who are neither established, nor VAT registered in Luxembourg can apply for this regime. Fiscal representation will only be allowed for a limited number of transactions such as the importation of goods of non-EU origin into Luxembourg, the subsequent deliveries of these imported goods or the services performed on these goods in Luxembourg after import (handling and warehousing). A foreign taxpayer performing intra-Community purchases, in addition to imports of goods of non-EU origin into Luxembourg, would therefore not qualify for the regime. He would indeed be liable for VAT in Luxembourg for his intra-EU acquisitions and would thus be precluded from the possibility to appoint a fiscal representative.

Appointment of a fiscal representative
The appointment of a fiscal representative is not mandatory as a foreign trader can always register directly for VAT pur- poses. Foreign traders are also allowed to designate several fiscal representatives, each one being responsible only for the transactions for which he acts as representative.

What are the obligations of a fiscal representative?
The fiscal representative acts in lieu of the foreign trader for all transactions for which he has been appointed as representative.
He will receive a specific VAT identification number under which he will have to submit the VAT returns and sales listings for all the foreign traders he represents. The VAT returns should include the costs and related input VAT incurred by the foreign trader in Luxembourg and related to the transactions covered by the representation. The VAT returns and recapi- tulative statements must be filed electronically; the records and supporting documents must also be stored electronically and an online access must be provided to the authorities.
The fiscal representative has the obligation to issue, on behalf of the trader, the invoices relating to the transactions for which he represents the foreign trader. He must also keep the necessary records enabling the tracking and tracing of the imported goods from the moment of their import into Luxembourg.
Finally, the fiscal representative is required to set-up a guarantee in form of a deposit at the Caisse de consignation or any other equivalent guarantee to ensure the payment of taxes, interest and fines due. This guarantee, calculated on the basis of 50 % of the VAT balance due for the last three monthly returns shall not be below 10,000 Euro.

How to become a fiscal representative?
Only a certified economic operator may act as a fiscal representative. The granting of such status is subject to a certification process undertaken by the tax administration (“Administration de l’Enregistrement et des Domaines”).
For more information
www.aed.public.lu

79% of the European Union GDP can be reached from Luxembourg in one day
The vast majority of the European Union’s GDP is within one day’s travel from Luxembourg – 500 miles or less. Luxembourg is at the heart of the European road and rail network: major north- south and east-west arteries provide easy and uncongested access to the main European consumer markets in France, Germany, the Netherlands, Belgium, Italy, Switzerland and even parts of the UK and Scandinavia. The state-of-the-art road and rail infrastructure provides the distribution channels for Europe’s fifth-largest cargo airport, a global hub for cargo giants such as Cargolux and China Airlines, and logistics providers such as Kühne & Nagel, Panalpina and DHL. Moreover, efficient railway connections to the ports of the North Sea (Antwerp, Zeebrugge, Rotterdam, Amsterdam, Hamburg) make Luxembourg a hinterland port. Air and sea freight connections to all the continents link Luxembourg on a daily basis with the world’s main manufacturing centers.
Lowest VAT rate in the EU
Standard Value Added Tax (VAT) rates in the EU vary from 15% to 25%. Luxembourg has consistently had the lowest possible VAT rate across the European Union (15%).

The only country in the EU that never requires VAT pre-financing
Most countries in the EU require that importers pay Value Added Tax (VAT) upon import of goods into the EU, prior to the sale of the goods to the end customer, a practice referred to as ‘pre-financing of VAT.’ Luxembourg’s advanced VAT regulations have completely eliminated that process. While several other EU countries allow similar processes upon request and under certain conditions, Luxembourg is the only country that never requires VAT pre-financing.

Favorable tax environment and competitive labor
cost
The Luxembourg Government pursues a growth-oriented and business friendly tax policy addressing the needs of the employers and employees alike. Lower indirect labor costs for health care and social security contributions provide for a win-win situation, which leads to a lower overhead for the company and a higher net salary for the employee than in the neighboring states.

Dedicated logistics parks
Two dedicated parks (Eurohub Centre and Eurohub South) provide real estate within easy reach of the airport, with direct rail connection, multi-modal facilities, and direct access to two major European highways. Both parks are dedicated to logistics and logistics-related value-added services.

Authorized Economic Operator and Fiscal Representation
Luxembourg has introduced the EU wide recognized Authorized Economic Operator (AEO) and the associated Fiscal Representation to allow for easier, faster, and more secure import/export operations and fast-track customs procedures.

Consistent EU first mover advantage
Luxembourg has consistently reacted very quickly to the developing EU legal and regulatory environment designed to boost the economy. For example, the rapid implementation of the EU framework legislation providing for the cross- border distribution of mutual funds in Europe led to the creation in Luxembourg of the world’s second largest mutual fund industry (after the US), with total net assets under management of more than three trillion US dollars.

Easy access to government and administration
Luxembourg’s small size and the strong focus on economic diversification provides a nimble economic environment. A very close cooperation between business, government and labor has resulted in a uniquely stable business environment, where disruptive labor action is virtually unknown, and government can address the needs of a business on an individual basis.
This is a short list of the reasons that have led world-class manufacturers such as Goodyear, DuPont and Delphi Automotive and top technology companies including Apple, Microsoft, eBay, PayPal and Amazon to capitalize – directly or via a logistics partner – on the unique economic circumstance and use Luxembourg as a hub for their European distribution.

For more information please visit

www.investinluxembourg.lu or contact the Luxembourg Board of Economic Development.

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