Starting from the commencement of 2023, a series of temporary adjustments to the VAT regime will be enacted in Luxembourg, ushering in alterations to the prevailing rates of VAT, colloquially known as TVA or Taxe sur la valeur ajoutée.
Within this framework, the conventional VAT rate within Luxembourg will undergo a decrease from 17% to 16%, while the intermediate rate, previously set at 14%, will now stand at 13%. Similarly, the diminished rate will undergo a reduction of 1%, transitioning from 8% to 7%. Conversely, one aspect remains unaltered: the super-reduced VAT rate, holding steady at 3%.
The timeline for the application of these revised VAT rates is envisioned to span the entirety of the year 2023.
It is outlined that the standard VAT rate is the default imposition on all transactions, unless a specific exception is articulated, designating the product or service as qualified for a reduced rate, zero rate, or exemption.
Noteworthy instances of zero-rated supplies encompass intra-Community transactions, international transportation, the export of goods to non-EU countries, and a selection of other primarily linked to international trade.
The ongoing reduced rate, currently established at 7%, is pertinent to certain services such as domestic cleaning services, repair services, and hairdressing.
Conversely, the super-reduced rate of 3% is relevant to items like foodstuffs and unflavored water, water supply services, medicinal and pharmaceutical products, veterinary items, reading materials such as books and newspapers, entrance fees to events, specific passenger transportation services, HoReCa (Hotel, Restaurant, and Café) services, and analogous categories.
A distinct intermediate rate, now positioned at 13%, is applicable to commodities such as wine, fuels, cleaning agents, printed advertising materials, heating services, and several other items.
These modifications in VAT rates serve as strategic economic tools aimed at assisting citizens in managing the effects of inflation and consequent price hikes.