Luxembourg: Temporary VAT rate reductions set to expire 1 January 2024

Temporary VAT rate reductions included in “anti-inflation package” will expire on 1 January 2024

Temporary VAT rate reductions set to expire 1 January 2024

Temporary value added tax (VAT) rate reductions included in the “anti-inflation package” adopted by the government on 20 September 2022 and effective throughout 2023 (read TaxNewsFlash) will expire on 1 January 2024.

The former VAT rates of 17%, 14%, 8% and 3% will thus be reinstated on 1 January 2024.

KPMG observation

The tax/chargeability point of a transaction is key to determining the VAT rate applicable and depends on several factors including:

  • Date of supply of the goods/services
  • Date a VAT invoice was or could have been issued
  • Date of receipt of early/down payment

In addition, reapplication of the former VAT rates may not always be straightforward particularly in connection with certain transaction types and scenarios such as advanced payments, continuous supplies of services, or credit notes.

Read a November 2023 report prepared by the KPMG member firm in Luxembourg


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