11.17.22

Temporary reduction of VAT rates

Inflation is spiralling across Europe, compelling multiple government to closely scrutinise their fiscal policies. While typically this year we have seen governments target niche VAT rates, such as energy, gas or food, some governments are making more radical changes by overhauling their standard and reduced rates.

Luxembourg is one such country – due to inflation standing at 6.9% in September 2022, it has been driven to review its tax measures. To this effect, Luxembourg has now announced a temporary decrease of the standard, intermediary and reduced VAT rate applied to goods and services, in line with the following:

• Standard rate: from 17% to 16%
• Intermediary rate: from 14% to 13%; and
• Reduced rate: from 8% to 7%.
• The super-reduced rate will remain unchanged at 3%.

These rates will apply from 1^st January 2023 to 31 December 2023. It is expected that the VAT rates will return to their original rate at the start of 2024.

Tungsten is compliant in Luxembourg and supports all valid VAT rates in the country. Tungsten will ensure the new VAT rates are integrated as part of our solution once effective.