Luxembourg - Temporary decrease of VAT rates

The Tripartite Coordination Committee consisting of the three-parties of government, employers and unions has agreed to decrease Value Added Tax rates as part of a package aimed at combating rising inflation. The measures are scheduled to be applied from 1 January 2023 until 31 December 2023.

Among these measures, the Luxembourg government has decided to introduce temporary 1% decreased Value Added Tax (VAT) rates on goods and services, most notably as follows:

• The standard VAT rate of 16% (instead of the longstanding 17% rate) will apply to every good or service not subject to any other lower VAT rate.

• The intermediary VAT rate of 13% (instead of 14%) will 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; and

  • certain wines.

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

Businesses of all sectors should consider how to implement the announced changes so as to be prepared when the new rates come into effect.