Luxembourg VAT Guide 2026

Overview — VAT System in Luxembourg (TVA)

Luxembourg's TVA is governed by the VAT Law (Loi TVA) and is administered by the Administration de l'Enregistrement, des Domaines et de la TVA (AED). As an EU member state, Luxembourg's VAT system complies with the EU VAT Directive (2006/112/EC). The standard rate of 17% was increased from 16% as part of the 2025 budget reform. Luxembourg has historically maintained one of the lowest standard VAT rates in the EU, making it an attractive jurisdiction for e-commerce and digital service providers. VAT returns must be filed monthly or quarterly depending on the taxpayer's annual turnover.

Standard Rate — 17% (2026, up from 16%)

The standard Luxembourg VAT rate is 17% for 2026, increased from 16% in previous years. This rate applies to most goods and services not covered by reduced rates or exemptions. Despite the increase, Luxembourg maintains one of the lowest standard VAT rates in the European Union (the EU minimum standard rate is 15%). The rate is applied to the taxable base (ex-VAT price) for most B2B and B2C transactions. VAT-inclusive pricing is standard for B2C transactions.

Reduced Rate — 8%

The reduced VAT rate of 8% applies to a broad range of goods and services:

• Food and beverages (except alcoholic beverages served in restaurants)
• Restaurant and catering services (excluding alcoholic beverages)
• Passenger transport (taxis, buses, trains)
• Hotel and accommodation services
• Cultural services (cinema, theatre, museums, concerts)
• Sporting events and facilities
• Waste collection and recycling services
• Domestic help and cleaning services
• Funeral services
• Books, newspapers, and periodicals (including e-books and digital newspapers)

Super-Reduced Rate — 3%

The super-reduced VAT rate of 3% applies to selected essential goods:

• Pharmaceutical products (medicines prescribed by doctors)
• Medical equipment for disabled persons
• Children's car seats
• Social housing construction and renovation (under specific conditions)
• Live animals and animal feed (for agricultural production)
• Seeds, plants, and fertilisers used in agriculture

Exempt Supplies

The following supplies are exempt from VAT (no VAT charged, input VAT recovery generally not available):

• Exports of goods outside the EU (zero-rated with input VAT recovery)
• Intra-EU supplies of goods to VAT-registered businesses (zero-rated)
• Insurance and reinsurance transactions
• Credit and financial services (loans, deposits, currency exchange)
• Educational services (public and private schools, universities)
• Medical and healthcare services (hospitals, doctors, dentists)
• Postal services (universal service)
• Rental of residential property (long-term)

VAT Registration Threshold

Businesses with annual turnover exceeding EUR 35,000 for goods or EUR 25,000 for services must register for VAT. Small businesses below these thresholds may benefit from the small business exemption (franchise de TVA). Voluntary registration is permitted for businesses below the threshold, allowing input VAT recovery. Non-established foreign businesses providing taxable supplies in Luxembourg must register regardless of turnover, subject to the EU One-Stop Shop (OSS) and Import One-Stop Shop (IOSS) schemes.

VAT Filing and Refunds

VAT returns are filed according to the taxpayer's status:

• Monthly: Taxpayers with annual turnover exceeding EUR 620,000
• Quarterly: Taxpayers with annual turnover below EUR 620,000
• Annual return: All registered taxpayers must file an annual VAT summary

Returns are due by the 15th of the month following the period. VAT credits can be carried forward or refunded. Refunds for excess VAT credits are processed within 30 days for monthly filers and 45 days for quarterly filers. Luxembourg also participates in the EU VAT refund scheme for non-established businesses (via the e-TVA portal).

E-Commerce and Digital Services

Luxembourg has historically been a popular jurisdiction for digital service providers due to its low VAT rate. Since the 2021 EU e-commerce VAT package, digital services supplied to EU consumers are taxed at the consumer's country rate under the One-Stop Shop (OSS) scheme. Luxembourg remains a registration location for many non-EU digital service providers using the Import One-Stop Shop (IOSS) for low-value imports.

FAQs

What is the VAT rate for e-books in Luxembourg?

E-books and digital newspapers benefit from the reduced rate of 8%, the same as printed books. This aligns with EU rules allowing reduced rates on digital publications.

Can foreign companies recover Luxembourg VAT?

Yes, non-established EU businesses can claim VAT refunds through the EU VAT refund portal. Non-EU businesses can claim refunds directly from the AED, subject to reciprocity rules.

What are the penalties for late VAT filing?

Late filing penalties range from EUR 50 to EUR 10,000 depending on the delay and turnover. Late payment interest accrues at 0.6% per month. Systematic non-compliance may result in tax audits and penalty assessments.

Disclaimer

This guide provides general information about Luxembourg VAT (TVA) for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Luxembourg tax advisor (conseil fiscal) or the AED directly for advice specific to your situation. InvestmentKit does not provide tax advice.