Luxembourg reduces VAT

The VAT reduction is temporary and will only last one year — throughout 2023. This is just one of many measures taken as a part of an agreement between the government and the trade unions of the Grand Duchy.

The regular VAT rate — which applies to most goods and services — will be reduced from 17% to 16%. The intermediate rate on fuel will be reduced from 14% to 13%. And the reduced rate used for heating will fall from 8% to 7%.

In addition to reducing VAT, the agreement will also increase subsidies for diesel fuel. The discount of up to 0.15 euros per liter will be valid from October 31, 2023 and will last for two months — until the end of next year. Compensation for oil products will also apply to liquefied gas. This will prevent the price of gas from rising too much due to shortage.