VAT Regime
What is VAT?
Value Added Tax in Luxembourg
VAT (Value Added Tax) is the value added tax that applies to the sale of goods and services in Luxembourg, similar to VAT in other European countries. It is an essential tax that all businesses must understand, as it directly affects daily operations and the formation of prices for products and services. Understanding how to apply and calculate VAT is crucial to ensure that your business operates legally and maximizes its tax deductions. VAT is collected at every stage of the production chain, but it is the end consumer who pays the tax in full.
VAT Rate
Understand the Different Aliquots
Normal Rate (17%)
Applied to the majority of goods and services.
Reduced Rate (8%)
Used for certain products and services, such as gas, electricity and some cultural items.
Super-Reduced Rate (3%)
Applied to food, medicines, books and other goods considered essential.
Intermediate Rate (14%)
Applied to specific accommodation services and certain categories.
VAT Exemptions
When Your Business May Be Exempt
Certain activities or types of businesses in Luxembourg may be eligible for VAT exemptions. Businesses operating in specific sectors, such as healthcare, education, financial services or non-profit associations, may be exempt from paying and collecting VAT. This exemption reduces operational costs, but it also means that the business cannot deduct VAT on its own purchases.
VAT Refund Request
Recover Overpaid Amounts
Businesses that pay VAT on their purchases can request a refund of the tax when the amount paid exceeds the VAT charged to customers, or in specific cases of exporting products outside Luxembourg. The VAT refund process can be complex and requires precise documentation, but it can represent a significant saving for the business.
