Luxembourg's 17% standard VAT rate is the lowest in the European Union, and three reduced bands sit below it. Businesses stay outside the system entirely up to €50,000 of annual turnover.
Luxembourg's "TVA logement" scheme cuts VAT to a super-reduced 3% (instead of the 17% standard rate) on building or renovating a dwelling used as a principal residence. The benefit is capped at €50,000 of VAT per dwelling. Claim it by direct application (the contractor invoices at 3% after AED approval) or by reimbursement of the difference afterwards via the AED. The home must be a main residence for at least two years. Separate from the Bëllegen Akt purchase credit.
ECOFIN is set to agree new rules on cross-border VAT fraud at its 4 May meeting in Brussels, the latest step in a decade-long effort to close the EU's largest tax-revenue leak.