AGEFI Luxembourg - mai 2025

AGEFI Luxembourg 4 Mai 2025 Economie Continued page 1 Thememorandum introduced a “fair and reciprocal plan” anddirected theUS trade representative (USTR) and the Commerce Department to examine and equalize the tariff rates applied to US exports by each trading partner while considering non-tariff barriers such as VAT, government subsidies, and other regulations affecting US companies. Trump further signed an executive order on 2 April 2025, introducing a newmin- imum 10% baseline tariff applied to all US trading part- ners and reciprocal duties ranging from 13% to 54%. These tariffs, cal- culated as half of the bilateral deficit rel- ative to imports from each partner, target economies that run the largest bilateral trade sur- pluses with the US or those that impose signifi- cantly larger tariffs on US exports. As a consequence, USwill levy an additional 10% customs duties on imports from the EU for the time being — i.e., while the EU and US seek to reach an agreement during their currently ongo- ing discussion. If the discussions are not success- ful, the US levied customs could increase to 20% after a delay of 90 days. For the time being, a spe- cial tariff of 25% has been (re-)introduced for the steel and automotive sector. On the EU side any increase of customs duties has been put on hold for the duration of the dis- cussionwith the US over the next 90 days. In case no agreement is achieved, additional tariffs rang- ing between 10% to 25%might be implemented. Comparing Import Costs: US vs. EU Given these volatile times, businesses need to com- pare import costs to continue to make the right decisions for their supply chain. When comparing import costs between theUS and the EU, business- es should consider several key factors— including whether VAT applies and is deductible, the appli- cableVAT rate customs duties, and additional fees. In the EU, VAT is a consumption tax applied to goods and services, with rates varying by Member State. On average, EU VAT rates range from 17% to 27%. In contrast, the US does not have a federal VAT system; instead, it relies on state sales taxes, which can vary significantly from one state to another. This difference in tax structures can lead to varying import costs depending on the destination of the goods. Customs duties are another critical factor in deter- mining import costs. The EU has a common cus- toms tariff, which means that goods imported from outside the EU are subject to the same duty rates across member states. In the US, customs duties can vary based on the product category and the country of origin. Businesses must be aware of these differences when calculating their total import costs. In addition to VAT and customs duties, business- es should also consider additional fees associated with importing goods. These can include han- dling fees, storage fees, and compliance costs related to customs documentation and regula- tions. The complexity of customs procedures in both the US and the EU can lead to increased compliance costs, which businesses must factor into their overall import strategy. Though import VAT is in principle due upon importation, it is in theory deductible if the importing business realizes the import for its business purpose and is entitled to a full input VAT deduction right. There might however be timing differences between the date import VAT would become due and the date import VAT could be reclaimed and would be refunded. One effective way for businesses to manage cash flow related to import VAT is through deferment schemes available in various Member States in the EU. These schemes allow businesses to defer the payment of import VAT and differ in nature between the Member States. Import VAT payment might thus be deferred for instance until it either could be set-off against the receivable or reclaimed or the goods are sold or used, rather than paying it upfront at the time of importation. By deferring VAT payments, businesses can thus retain cash for a longer period, allowing them to invest in operations, inventory, or other critical areas; deferment schemes can consequently pro- vide businesses with greater liquidity, reducing the need for short-term financing to cover VAT costs; with deferred VAT payments, businesses can streamline their accounting processes, as they only need to account for VAT when the goods are sold. To benefit from deferment schemes, businesses must typically meet certain eligibility criteria, which may include having a valid VAT registra- tion andmaintaining accurate records of imports. It is essential for businesses to consult with VAT experts or customs authorities to understand the specific requirements and procedures for imple- menting deferment schemes in their operations. While VAT is generally recoverable for business- es registered for VAT, there are circumstances where it can become a cost. This is particularly relevant in Luxembourg, where the VAT system has specific nuances that businesses must navigate. If a business carries out VAT-exempt supplies under Art 44 of the Luxembourg VAT Law, it may not be able to recover the VAT incurred on relat- ed imports. Businesses that make both taxable and (Art. 44) exempt supplies may face partial exemption rules, which can limit their ability to recover VAT on imports. Understanding when import VAT can become a cost is thus crucial for businesses operat- ing in Luxembourg, as it can sig- nificantly impact their financial performance. Strategies for Businesses To effectively navigate the challenges of import VAT and customs, businesses should consider the following strategies: Businesses should conduct a thorough analysis of their import costs, comparing the total expenses associatedwith importing goods from the US and the EU. This analysis should include the deductibility of VAT, the VAT rates, customs duties, and any additional fees. By understanding the total cost of imports, businesses can make informed decisions about their sourcing strategies. Given the dynamic nature of import VAT and customs regulations, businesses must stay informed about any changes that may impact their operations. This includes monitoring updates from customs authorities, trade organi- zations, and industry associations. By staying informed, businesses can adapt their strategies to mitigate potential disruptions. Investing in technology and automation can help businesses streamline their import processes and reduce compliance costs. Customs management software can assist in tracking shipments, man- aging documentation, and ensuring compliance with regulations. By leveraging technology, busi- nesses can enhance their efficiency and reduce the risk of costly errors. EngagingwithVAT and customs experts can pro- vide businesses with valuable insights and guid- ance. These professionals can help navigate the complexities of import regulations, identify poten- tial cost-saving opportunities, and ensure compli- ance with all relevant laws. Collaboration with experts can ultimately lead tomore informed deci- sion-making and improved import strategies. Conclusion The challenges associated with import VAT and customs are multifaceted and require careful con- siderationbybusinesses operating in today’s global economy. By understanding the differences in import costs between theUS and the EU, aswell as the potential for cash flow management through deferment schemes, businesses canmake informed decisions that positively impact their bottom line. Additionally, recognizing when import VAT can become a cost, particularly in Luxembourg, is essential for maintaining financial health. Through comprehensive cost analysis, staying informed on regulatory changes, leveraging tech- nology, and collaboratingwith experts, business- es can navigate the stormof import VAT and cus- toms challenges and emerge stronger in the com- petitive landscape. Rebecca OBERMAHR, Partner, Indirect Tax Jacques VERSCHAFFEL, Partner, Indirect Tax EY Luxembourg A Luxembourg point of view Navigating the Storm: Import VAT and Customs Challenges L e Premier ministre Luc Frieden a effectué une visite de travail à Tokyo et à Osaka, du 22 au 25 avril 2025. À Tokyo, Luc Frieden a eu une entre- vue avec son homologue japonais, le Premier ministre Shigeru Ishiba, qui l'a reçu avec les honneurs militaires. Cette réunion a eu comme objectif de renforcer les relations bilatérales et d'échanger sur les principaux sujets d'actualité internationale. « Dans unmonde marqué par des divi- sions croissantes, les amitiés de longue date revêtent une importance particu- lière. Malgré leur éloignement géogra- phique, le Luxembourg et le Japon sont unis par des valeurs et des principes communs, ainsi que par des intérêts éco- nomiques communs dans les services financiers, l'économie des données, les services aériens et l'espace », a déclaré le Premier ministre. La visite au Japon s'est inscrite dans la volonté du gouvernement luxembour- geois de renforcer les liens d'amitié et de coopération avec le Japon, et de consolider ses partenariats avec des pays partageant les mêmes valeurs et principes. « Le Luxembourg et le Japon croient en l'ordre multilatéral basé sur les règles, l'État de droit ainsi que le libre- échange », a dit Luc Frieden. « C'est pour cela que je souhaite renforcer notre coopération avec des partenaires stratégiques, y compris ceux au-delà de l'Europe, comme le Japon. » Luc Frieden a également rencontré plu- sieurs représentants clés du monde politique et économique japonais afin de mettre en lumière les opportunités de coopération et d'approfondir les relations avec le Japon. En outre, le Premier ministre s'est rendu à Osaka pour l'Exposition uni- verselle de 2025, où il a notamment visité les pavillons luxembourgeois et japonais. Osaka a été l'hôte de la pre- mière Exposition universelle à se dérouler enAsie, il y a 55 ans, en 1970. Cette visite a aussi été l'occasion de souligner l'engagement commun entre le Luxembourg et le Japon en faveur de l'innovation et du progrès technologique. « Grâce au Japon, le monde est rassem- blé dans toute sa diversité à cette expo- sition universelle, symbolisant l'unité dont notre monde a plus que jamais besoin », a exprimé le Premier ministre. Source : ministère d'État Le Premier ministre Luc Frieden en visite de travail au Japon « Je souhaite renforcer notre coopération avec le Japon » ©ME E n date du 25 avril 2025, l'agence de notation Scope Ratings a confirmé la notationAAA du Luxembourg avec perspectives stables. Scope Ratings certifie une fois de plus la bonne tenue financière du pays, grâce à des fondamen- taux économiques solides et à une gestion bud- gétaire prudente. Les interventions ciblées en faveur du secteur de la construction et des ménages ont permis de soutenir la reprise éco- nomique en 2024, et les perspectives de crois- sance continueront d'être alimentées par un niveau élevé d'investissements publics. La notation reflète globalement une économie prospère et compétitive, étayée par des secteurs à haute valeur ajoutée et des institutions solides. Scope Ratings s'attend à moyen terme à des défi- cits publics modérés et à une trajectoire de la dette publique soutenable. Source : ministère des Finances Scope Ratings confirme la notationAAAdu Luxembourg KirchbergLuxembourg @PhilippeSchroeder