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Luxembourg has the lowest standard VAT rate in the EU at 17%, plus reduced rates of 14%, 8% and 3%. Here is what each rate covers and how VAT works day to day.
Value added tax (VAT) in Luxembourg is managed by the Registration Duties, Estates and VAT Administration (AED). With a standard rate of 17%, the country applies the lowest rate in the European Union – one reason some products are cheaper here than in neighbouring countries.
| Rate | Name | Examples |
|---|---|---|
| 17% | Standard rate | Most goods and services: electronics, clothing, fuel, services |
| 14% | Intermediate rate | Certain wines, solid fuels, printed advertising, custody and management of securities |
| 8% | Reduced rate | Gas and electricity, hairdressing, bicycle and shoe repairs, cleaning of private households |
| 3% | Super-reduced rate | Food, books and press, medicines, restaurant meals (excluding alcoholic drinks), passenger transport, creation of housing (under conditions) |
The precise list of goods and services under each rate appears in the annexes to the VAT law published by the AED.
As a consumer, VAT is included in displayed prices: there is nothing you need to do. The 3% super-reduced rate on food and medicines noticeably lightens the daily shopping basket. For housing, a 3% rate can apply to the creation or renovation of a main residence, within the limits and conditions set by the AED – a valuable advantage for building work.
Self-employed people and companies must in principle register for VAT. A franchise scheme exempts small businesses whose annual turnover stays below the threshold published by the AED. The steps are done online:
Good to know: for cross-border purchases, the VAT of the country of consumption generally applies; online sellers charge Luxembourg VAT to customers living in Luxembourg.
