How VAT (TVA) Works in Luxembourg (2026): 17% Standard, plus 14%, 8% and 3%
Luxembourg applies value added tax (TVA) at a standard rate of 17% -- the lowest standard VAT rate in the EU -- plus an intermediate 14%, a reduced 8%, and a super-reduced 3% (food, books, medicine, passenger transport). Businesses register once turnover passes the threshold. Verify with the AED (aed.public.lu).
The four TVA rates
Luxembourg has four rates. Standard 17% applies to most goods and services and is the lowest standard VAT rate in the European Union. Intermediate 14% covers items such as certain wines and advertising. Reduced 8% covers gas, electricity, hairdressing, shoe and leather repair and similar. Super-reduced 3% applies to food, non-alcoholic drinks, books, newspapers, medicines, children's clothing and passenger transport. Exports and intra-EU supplies are zero-rated; financial, insurance, health and education services are generally exempt. Confirm the correct rate with the AED.
Registration and returns
A business must register for TVA once its taxable turnover exceeds the registration threshold; voluntary registration is possible below it, and there is a franchise regime for very small businesses. Registered businesses charge TVA on sales, deduct input TVA on purchases and file monthly, quarterly or annual returns depending on turnover. Luxembourg's low standard rate makes it attractive for certain cross-border and e-commerce structures, subject to EU place-of-supply rules. Confirm the current threshold and filing frequency with the AED.
FAQ
Why is Luxembourg's VAT so low?
Its standard rate of 17% is the lowest in the EU, a long-standing policy choice. There are also intermediate 14%, reduced 8% and super-reduced 3% rates. Verify the rate for your goods or services with the AED.
What falls under the 3% super-reduced rate?
Food and non-alcoholic drinks, books and newspapers, medicines, children's clothing and passenger transport, among others. It is one of the lowest reduced rates in Europe. Confirm the classification of a specific item with the AED.
⚠️ Informational estimate, not tax advice. Payroll software may differ in edge cases. Verify with a professional.