The decreased Luxembourg VAT rates in practice
18 November 2022
The package of measures adopted recently by the Luxembourg government to tackle inflation foresees a temporary decrease of the Luxembourg VAT rates for the period from 1st January 2023 to 31st December 2023.
In particular, to the exception of the super-reduced rate (3%), the current Luxembourg VAT rates shall be decreased by 1%. Therefore, the standard rate will become 16%, while the intermediary rate will become 13% and the reduced rate 7% (see also our Indirect Tax Newsletter dated 6 October 2022).
Although this measure seems simple in essence, its practical implementation triggers certain questions and challenges for businesses, given that the latter shall take into consideration the Luxembourg VAT rules related to the chargeable event and the chargeability of VAT (which vary depending on the nature of the supplies) before they amend accordingly their accounting systems.
We have set out below an overview of the key points for the concepts of the chargeable event/chargeability of VAT as well as practical examples for different type of transactions illustrating when the decreased VAT rates should apply.
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French Version