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Low VAT in Luxembourg

Updated on Tuesday 09th January 2018

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VAt_in_luxembourg.jpgThe well-balanced and reliable economy, alongside with the satisfactory tax regime are among the solid arguments an entrepreneur can consider when deciding on business operations in Luxembourg. If for many years, the VAT rate in the Grand Duchy was set at 15%, starting with 2015, as imposed by the European Union legislation, the tax was modified to 17%, a rate which is also available for 2018. The VAT is at low rates for certain products and services in the country. In order to align with the company registration requirements if you want to do business in Luxembourg, it is suggested to get in touch with one of our company formation specialists in Luxembourg for complete support, including information about the low VAT imposed on certain products and services.
 

VAT rates in Luxembourg

 
Luxembourg had a special status from a taxation point of view in the past few years, but even if the rates have changed a bit, that doesn’t mean that the business environment has suffered adjustments or transformations. Until 2015, the VAT rate in Luxembourg was set at 15%, the lowest in the European Union, with an even lower rate of 3% for electronic supplies and the related services. Also, the same low VAT in Luxembourg was applicable to the TV and radio broadcasting providers and e-books, even if it was considered against the rules and regulations imposed for EU country members.
 
In 2018, the VAT standard rate in Luxembourg is set at 17%. As for the 3% VAT rate, this is still available in the Grand Duchy and it is the lowest tax imposed on food products, newspapers, medical equipment, particular pharmaceutical products, hotels and accommodations, restaurants, cafes, water supply, transportation, collection of domestic waste, suppliers for buildings under construction, or admission fee to sports events or amusement parks in the country. This low VAT rate is still compulsory for TV and radio providers in Luxembourg and for certain phone and internet services.
 
When opening a company in Luxembourg, one should consider the requirements in this matter and align with the applicable legislation. Our agents in company incorporation in Luxembourg can provide you with the necessary support at company registration in any city in the Grand Duchy.
 

The 14% VAT rate in Luxembourg

 
The VAT rate of 14% in Luxembourg is imposed on cooling and heating systems, cleaning and washing items, security administration, credit administration, mineral oils, solid mineral fuel, particular types of wines.
 
 

The 8% VAT rate in Luxembourg

 
Another low VAT rate in the Grand Duchy is set at 8% and it is imposed for the following:
 
private household cleaning;
leather products (shoes, bags);
the services of a cosmetic salon;
natural gas;
firewood;
electricity;
plants for decorative purpose.
 
The only sector that has subdivisions exempt from VAT is the transportation, particularly the international and the intra-community convey. Any foreign company in Luxembourg must comply with the regulations imposed on VAT, meaning that the invoices should be carried out with the country’s VAT requirements, the bookkeeping must be in possession of the company for at least seven years, and if the business operates under the home country currency, this must observe the established rate.
 
For additional information in this matter, we suggest you contact our team of company incorporation representatives in Luxembourg.
 

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