VAT rates in Luxembourg in 2026: 17, 14, 8 and 3%

In short. Luxembourg applies four VAT rates in 2026: a standard rate of 17%, an intermediate rate of 14%, a reduced rate of 8% and a super-reduced rate of 3%. The standard rate is still the lowest in the European Union. Reduced rates are not a matter of choice: they depend on the precise nature of the good or service sold, and a wrong rate is rarely fixed without cost.

A founder preparing their first invoices, a tradesperson hesitating over a quote line, a retailer opening a shop: they all ask the same question, and the answer is buried under a pile of outdated or plain wrong pages. Here are Luxembourg's four rates as they stand on 22 July 2026, what each one covers in practice, and the trap of the "16%" or "13%" figures that still circulate and have not been valid since 1 January 2024.

The four VAT rates in force in Luxembourg

The country is unusual in having four rates, including a 14% intermediate rate that few member states operate. Here is the reference grid.

The logic is not accounting logic, it is policy: reduced rates target goods seen as essential or of cultural interest, and the standard rate soaks up everything else. That is why two similar products on the same shelf can carry two different rates, and why classification is not something to improvise.

Which rate applies to your sales?

The real question is never "what is the standard rate" but "which rate does exactly what I sell fall under". Here are the cases that come up most often in searches, with the applicable rate.

Two subtleties are worth real money in an audit. First: in a restaurant, the meal is 3% but the wine or beer on the same bill stays at 17%, which forces you to split the bill by rate. Second: the same work can switch depending on context, like renovating a main residence, which enjoys the 3% super-reduced rate under strict conditions, while the same work on commercial premises stays at 17%. We cover that special case in our guide to the 3% housing VAT rate for the tradesperson who invoices.

Why you still come across "16%" or "13%"

This is the number-one source of confusion, and it has a precise explanation. For the 2023 calendar year, and only 2023, Luxembourg temporarily cut its rates by one point as part of an anti-inflation package: the standard rate fell to 16%, the intermediate to 13% and the reduced to 7%. Only the 3% super-reduced rate stayed put, as there was no room under the European floor.

That cut ended on 1 January 2024. Since then the rates have returned to 17%, 14%, 8% and 3%, and they have not changed for 2026. In other words, any page, calculator or template invoice still showing 16% is stuck on an expired measure. If you reuse an invoice template from 2023, check the rate before you send it: charging 16% today means under-collecting VAT and owing the difference.

The lowest rate in the EU, and what that means

At 17%, Luxembourg has the lowest standard VAT rate in the European Union, where the member-state average sits around 21%. That is a genuine competitiveness argument for retail and for certain cross-border activities. But the advantage does not carry over automatically: as soon as you sell to a taxable business in another member state, the sale generally leaves Luxembourg VAT and the reverse-charge mechanism applies at the buyer's end. This point, often misconfigured, is covered in our article on intra-EU VAT in Luxembourg.

Likewise, a small business below the VAT exemption threshold of €50,000 charges no rate at all: it stays outside the scale as long as it remains eligible, in exchange for losing its right to deduct. So the right rate means nothing until you have first settled the company's VAT regime.

What the right rate changes in your accounts

A wrongly assigned rate does not show up straight away. It shows up in an audit, or in the annual recapitulative return, when the gap surfaces. In a management system, the rate is not a box you pick invoice by invoice on a hunch: it is attached to the item sold and to the matching account in the PCN 2020 chart, once, at configuration. A 3% service, an 8% product, a 17% line: each carries its default rate, and the VAT return is then generated with no re-keying, as we explain in our guide to the VAT return in Luxembourg.

This is exactly where bringing the software and the accounting under one roof makes the difference. An integrator knows how to switch on the VAT module; an accountant knows the classification of Luxembourg rates. Few master both, and that is where the costly errors hide. At Advena, we keep your books in the Odoo we configure ourselves, Luxembourg rates included, from €325 a month, all in.

Frequently asked questions

What is the standard VAT rate in Luxembourg in 2026?

The standard rate is 17%. It applies to all goods and services that do not fall under a reduced rate, and it is the lowest standard rate in the European Union. It returned to 17% on 1 January 2024 after a temporary cut to 16% limited to the 2023 year.

What are the four Luxembourg VAT rates?

Luxembourg applies a standard rate of 17%, an intermediate rate of 14%, a reduced rate of 8% and a super-reduced rate of 3%. The 14% intermediate rate is an unusual feature that few member states operate.

Which VAT rate applies to restaurants in Luxembourg?

Meals served in a restaurant fall under the 3% super-reduced rate. Alcoholic drinks, however, stay at the 17% standard rate, which means the bill has to be split by rate on the invoice.

Does the 16% VAT rate still exist?

No. The 16% rate was a temporary measure limited to the 2023 year. Since 1 January 2024 the standard rate has been back at 17%, and it has not changed for 2026. Any page or invoice still showing 16% is out of date.

How do I know which rate applies to my activity?

The rate depends on the precise nature of the good or service, not on the sector in general. For a borderline case, the reference is the official indirect-tax portal, and it is better to confirm the classification with your accounting firm before issuing the invoice than after an audit.

Read more

• VAT returns in Luxembourg: frequency, eCDF and deadlines
• VAT exemption in Luxembourg: the €50,000 threshold
• The 3% housing VAT rate in Luxembourg: a guide for tradespeople
• Intra-EU VAT in Luxembourg: reverse charge and recapitulative statements
• Accounting firm in Luxembourg: the complete guide for an SME

Why Advena?

We keep the books of Luxembourg SMEs in the management system we deploy ourselves, with Luxembourg VAT rates properly attached to the PCN 2020 accounts. A fee agreed up front from €325 a month, a named account manager, and no invoice outside the monthly fee. We inform without standing in for the tax authority: on a disputed rate classification, we point you to the official source rather than ruling in its place.

Rates in force on 22 July 2026, based on the indirect-tax portal of the Registration Duties, Estates and VAT Authority. Rates and their scope can change: check the official source before any binding decision. This article informs, it does not replace an analysis of your situation.