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Luxembourg loses competitive advantage in 2015 | Meridian

Luxembourg loses competitive advantage in 2015 | Meridian.

When the new VAT rules come into place in 2015, the competitive advantage that Luxembourg has will be gone. Luxembourg has a very low VAT rate with a standard VAT rate of 15%. It also has a super reduced rate of 3% on e-books and the country’s hotel and catering industries.  When the new EU VAT rules are put in place in 2015, The government in Luxembourg are starting to address its loss of €545m and so they are increasing its key VAT rates by 2%.

In 2015 Luxembourg’s standard VAT rate will increase to 17%, however the 3% super reduced VAT rate has not been increased as the Grand Duchy has said it needs to keep jobs safe in its hotel and catering industries. It has been estimated that Luxembourg will lose €660m – €1.1bn when the new VAT rules come in in 2015, however Luxembourg officials are stating that the country will still attract global companies as Luxembourg is business friendly.

According to the EC, Luxembourg will no longer have a competitive advantage over other EU states and a fairer VAT system will be put in place.

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