Luxembourg: VAT rate increase as of 1 January 2015

In his recent “State of the Nation” speech Luxembourg’s Prime Minister, Jean-Claude Juncker announced that the standard VAT rate in Luxembourg will increase with effect from 1 January 2015 (i.e. from the date when the new VAT rules for B2C sales of eservices will become applicable in the EU). Mr. Juncker has explained, that this VAT rate increase should help Luxemburg to counterbalance the expected loss of the VAT revenues due to new VAT rules on eservices.

Current standard VAT rate in Luxembourg is 15%. Even though the new VAT rate has not been disclosed yet, we understand that the Luxembourg’s government intends to maintain the lowest standard VAT rate in the EU also after the proposed increase. This would mean that the new standard rate will have to be somewhere between 16% and 18%.

You can find some more information about this planned change here and here.

What does this mean for you?

If your company is registered for VAT in Luxembourg you should be aware that any change in the VAT rates will affect businesses both as suppliers and as customers. Businesses registered for VAT in Luxembourg should therefore keep abreast with the planned VAT developments and adjust their ERP and shopping cart systems and invoices accordingly.

There is still plenty of time to take care of this issue – just do not forget about it in the shadow of the bigger 2015 VAT changes.