Luxembourg – Decrease of VAT rates starting 1st January 2023

Bills of Law 8080 and 8083, both deposited with the Luxembourg Parliament on 12 October 2022, provide for decreases in VAT rates in Luxembourg.

Temporary VAT decrease

The Law dated 26th October 2022, has been published into the Memorial A534 on 26th October 2022. It notably provides for a temporary reduction in Luxembourg VAT rates as part of measures to combat the economic effects of inflation, that will be effective from 1 January 2023 to 31 December 2023.

The reductions concern the following rates :

• standard, which will be reduced from 17% to 16%,,
• intermediate, from 14% to 13%,
• reduced, from 8% to 7%.

The super reduced rate of 3% will remain unchanged.

The Luxembourg VAT authorities published on 6^th December 2022 the Circular n°812. This latter specifies the modalities of application of the new VAT rates considering the principles of chargeability of VAT in Luxembourg.

Permanent VAT decrease

The Law dated 23 December 2022 has been published into the Memorial A649 on 23 December 2022. It provides for a permanent reduction in VAT rates on certain categories of goods and services :

• Application of the 8% rate (7% until 31 December 2023) to the repair of household appliances as well as to the sale, rental and repair of bicycles, including pedal-assisted bicycles known as “electric bikes”
• Application of the 3% rate to the supply of solar panels and their installation

The Grand-Ducal regulation dated 23 December 2022 that has been published in the Memorial A656 on 23 December 2022 determines the conditions of application of the super-reduced rate to the supply and installation of the solar panels.

The Luxembourg VAT Authorities published on 28th December 2022 the Circular n°816. This latter specifies the modalities of application of the reduced rate as well as the super-reduced rate to the categories of goods and services listed above.

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