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Luxembourg Confirms Higher VAT Rates For 2015

by Ulrika Lomas, Tax-News.com, Brussels

01 April 2014


Luxembourg's Prime Minister Xavier Bettel has confirmed the Government's decision to increase three of the nation's value-added tax rates (VAT) by 2 percent from January 1, 2015.

From the beginning of next year, the standard rate of VAT will rise from 15 percent to 17 percent. The 2 percent hike will also apply to the reduced rates of VAT, from 12 percent and 6 percent, to 14 percent and 8 percent, respectively.

The super reduced rate, in place on basic commodities, is to remain unchanged at 3 percent. The 3 percent VAT rate will also continue to apply in the country's hotel and catering industry to support jobs.

Prime Minister Bettel explained that the VAT hikes are forecast to generate additional revenue for the state of around EUR350m (USD483m). He said the increase is necessary to partially offset the VAT shortfall anticipated after changes to European Union (EU) place of supply rules for telecommunications, broadcasting, and electronic services from January 1, 2015, to a taxation based on the destination principle, i.e. in the country where the customer belongs.

He said the Government had taken time to confirm the measure to fully discuss the impact of the decision on the competitiveness and attractiveness of the nation's economy.

TAGS: VAT rates | tax | value added tax (VAT) | commerce | VAT cross-border transactions | Luxembourg | tax rates | tax breaks | European Union (EU) | services | VAT goods & services classification | Europe

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