Luxembourg charges value added tax, called TVA in French and taxe sur la valeur ajoutée in full, at four levels, and the headline figure is the lowest of any country in the European Union. Where Germany starts at 19 percent and France at 20, the Grand Duchy applies 17 percent to most purchases. Three lower bands of 14, 8 and 3 percent sit beneath it, so the rate on a Luxembourg receipt depends entirely on what was bought. This guide sets out the four 2026 bands, the arithmetic in both directions, the temporary cut that came and went, and the rules that decide who has to charge TVA at all.
Four bands, and why 17 percent stands out
The 17 percent standard rate is the default: anything not assigned to a lower band pays it. That covers adult clothing, electronics, furniture, cars, alcohol, petrol and diesel, and most professional and digital services. Article 39 of the Luxembourg VAT law fixes 17 percent as the catch-all figure. It is a genuine outlier. The EU VAT Directive sets a legal floor of 15 percent for the standard rate, and no member state sits closer to that floor than Luxembourg. The reason is partly historical and partly deliberate: a small, open economy with a large cross-border retail trade keeps its consumption tax low to stay competitive with its neighbours, all of whom charge more.
| Country | Standard rate | Lower bands |
|---|---|---|
| Luxembourg | 17% | 14%, 8%, 3% |
| Germany | 19% | 7% |
| France | 20% | 10%, 5.5%, 2.1% |
| Belgium | 21% | 12%, 6% |
| EU legal minimum | 15% | set by the VAT Directive |
The unusual 14 percent band
Most countries run a standard rate and one or two reduced rates. Luxembourg keeps a rarely seen intermediate band at 14 percent, set out in Annex C of the VAT law. It is a short and specific list: still wines of 13 percent alcohol or less, solid mineral fuels and mineral oils used for heating, printed advertising material, and the safekeeping and management of securities. Few other EU countries operate a band quite like this, and it is easy to miss because so little falls into it. If you are pricing a wine list or a heating oil delivery, the 14 percent figure is the one to reach for rather than the 17 percent default.
Household energy at 8 percent
The 8 percent reduced rate covers household energy first of all: electricity, gas and district heating supplies. Alongside energy it applies to a set of labour heavy services, including hairdressing, repairs to bicycles, shoes and clothing, domestic cleaning, and the sale of ornamental plants and cut flowers. The logic is the usual one for reduced VAT: keep essential utilities and local personal services affordable, and lighten the tax on work rather than on goods.
The 3 percent super-reduced rate
At the bottom sits a 3 percent super-reduced rate, and it is where Luxembourg is most generous. It applies to food and non-alcoholic drinks, water, medicines, books, newspapers and periodicals in both print and digital form, children’s clothing and shoes, restaurant meals excluding alcoholic drinks, passenger transport, and admission to cultural venues. Building or renovating a main residence can also attract 3 percent, subject to approval by the tax authority and a cap per dwelling. A 3 percent rate on restaurant food is striking: a sit-down meal that would carry 10 percent in France or 7 percent in Germany is taxed at a fraction of that in Luxembourg, though any wine or beer with it moves up to the 17 percent standard rate.
Adding and removing TVA
The arithmetic is the same at every band. To add tax, multiply the net amount by the rate: a 200 euro net invoice at 17 percent picks up 34 euros of TVA and totals 234 euros. To strip tax out of a gross figure, divide by 1 plus the rate written as a decimal: 234 euros divided by 1.17 gives back the 200 euro net amount, and the 34 euro gap is the TVA. The Luxembourg VAT calculator does both directions at whichever band you pick, and the general purpose percentage calculator handles the same sum if you prefer to key the rate in yourself.
A worked example at each rate, on a 100 euro net price:
| Band | Net | TVA | Gross |
|---|---|---|---|
| Standard 17% | €100 | €17.00 | €117.00 |
| Intermediate 14% | €100 | €14.00 | €114.00 |
| Reduced 8% | €100 | €8.00 | €108.00 |
| Super-reduced 3% | €100 | €3.00 | €103.00 |
If you are setting a price rather than reading one, the markup calculator helps you build a net figure from a cost and a target margin before TVA goes on top. Consumer prices in Luxembourg shops are displayed with TVA already included, so the shelf sticker is the amount you pay at the till; the split only matters when you are invoicing or reclaiming input tax.
The 2023 cut that came and went
Rates have moved recently, which trips people up. For the 2023 calendar year only, the government cut the top three rates by one point, to 16, 13 and 7 percent, to soften the impact of inflation. The cut was always temporary. It lapsed on schedule and the 17, 14 and 8 percent rates returned on 1 January 2024, where they remain for 2026. The 3 percent super-reduced band was never touched. If you see an old invoice quoting 16 percent, that is the 2023 measure, not the current rate.
Who has to register
Businesses register with the Administration de l’enregistrement, des domaines et de la TVA (the AED) before charging TVA. Small domestic businesses with annual turnover under 50,000 euros can opt for the franchise regime and invoice without TVA, though they then cannot deduct the input tax on their own purchases. For a cross-border seller, the usual EU place-of-supply and distance-selling rules apply, so a shop delivering to Luxembourg consumers may have to charge Luxembourg TVA once it passes the EU-wide 10,000 euro threshold for cross-border sales of goods and digital services.
How TVA fits the rest of the payslip and price
VAT is only one of the taxes shaping what things cost and what you keep in Luxembourg. If you want the other side of the ledger, the Luxembourg salary calculator shows how a gross wage becomes take-home pay after social contributions and income tax, and the walkthrough in the guide on Luxembourg take-home pay explains the 23-band tax scale and the employment fund surcharge. Between them, the salary tools and this VAT breakdown cover most of the everyday tax maths a resident or a business in the Grand Duchy runs into.
Frequently asked questions
Why is Luxembourg VAT so low?
At 17 percent the standard rate is the lowest in the EU, just two points above the 15 percent legal floor. Luxembourg is a small, open economy with heavy cross-border trade, and a low consumption tax keeps its shops and services competitive with higher-taxed neighbours. The rate has been a long-standing feature rather than a recent giveaway.
What is the 14 percent band for?
It is an intermediate rate set out in Annex C of the VAT law and covers a short, specific list: still wines up to 13 percent alcohol, solid mineral fuels and heating oils, printed advertising, and the custody and management of securities. Most EU countries do not run a band like it.
Is restaurant food really taxed at 3 percent?
Yes. Restaurant meals are charged at the 3 percent super-reduced rate, one of the lowest restaurant VAT rates anywhere. Alcoholic drinks served with the meal are the exception: they move up to the 17 percent standard rate.
Did Luxembourg VAT rates change for 2026?
No. The rates in force are 17, 14, 8 and 3 percent, unchanged from 1 January 2024 and confirmed for 2026. The only recent change was a temporary one-point cut for 2023 alone, which expired at the end of that year.
Do I have to register for TVA if I run a small business?
You register with the AED before charging TVA, but a small business with annual turnover under 50,000 euros can choose the franchise regime and invoice without it. The trade-off is that it then cannot reclaim the TVA it pays on its own costs.
Sources
- Value Added Tax (VAT), Guichet.lu (Luxembourg government)
- Portail de la fiscalite indirecte, TVA, AED (Administration de l’enregistrement, des domaines et de la TVA)
- Changes in VAT rates in certain EU Member States applicable on 1 January 2024, European Commission