Temporary reduction of VAT rates in Luxembourg in 2023

An agreement signed on 28 September 2022 by the Luxembourg government, employers and trade unions foresees a set of specific measures to tackle inflation, aid households and companies and promote digital and energy transition.

One notable fiscal measure is the temporary reduction of applicable VAT rates, except for the super-reduced rate of 3% which will remain unchanged.

The normal rate, the intermediate rate and the reduced rate will be lowered by 1% from 1 January 2023 to 31 December 2023, as follows:

Lowered rate agreement signed on 28 September 2022 by the Luxembourg government 2

These lowered rates will be applicable to supplies of goods and services, the chargeable VAT event of which occurs in 2023. The chargeable event for VAT purposes depends on the nature of the supplies and the obligation or not to issue an invoice.

Care should therefore be taken in order to determine which VAT rate should be applied and to avoid charging (or being charged) the wrong VAT rate, as this could entail financial consequences.

Please feel free to reach out to our tax team should you require assistance with the implementation of this temporary measure

Samia Rabia, Partner - Brouxel & Rabia Luxembourg Law Firm
Samia RABIA, Partner
Olivier THILL, Counsel - Head of Tax
Olivier THILL, Counsel - Head of Tax

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