Luxembourg: Temporary 1% decrease of VAT rates

Standard, intermediary, and reduced VAT rates

Standard, intermediary, and reduced VAT rates

Article Posted date 27 September 2022

The tripartite (government, employers, and unions) on 20 September 2022 verbally agreed to a series of measures—an “anti-inflation package.” The measures are scheduled to be implemented in the beginning of October 2022, for application in 2023. The exact duration of the temporary measures remains to be defined.

Among these measures, the Luxembourg government has decided to introduce temporary 1% decreased value added tax (VAT) rates on goods and services as follows:

  • The standard VAT rate of 16% (instead of 17%) would apply to every good or service not subject to any other lower VAT rate.
  • The intermediary VAT rate of 13% (instead of 14%) would apply to certain goods and services, including, for example:
    • Custody and administration of securities
    • Administration of loans and credit guarantees by a person or organisation other than the one who granted the loans
    • Grape wine with 13% or less alcohol (except those fortified with alcohol, sparkling wines or wines known as vin de liqueur)
    • Solid combustible minerals, mineral oils and wood intended for use as fuel
    • Printed advertising material, commercial catalogues and similar publications, tourist information publications
    • Detergent and cleaning preparations, etc.
  • The reduced VAT rate of 7% (instead of 8%) would apply to certain goods and services, including, for example:
    • Gas
    • Electric energy
    • Heat supplied by a heating system
    • Hairdresser
    • Repair of bicycles
    • Footwear and leather articles
    • Several plant protection products, etc.
  • The 3% “super-reduced” VAT rate would remain unchanged.

The decrease of the VAT rates will require the publication of new VAT forms.

Read a September 2022 report prepared by the KPMG member firm in Luxembourg

 

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