In this context of strong inflation, VAT constitutes a lever of action that governments can activate to maintain buying power amongst the population. It is also a strong element of any tax policies – including those aimed at reducing the use of fossil energy. It comes therefore as no surprise that the Luxembourg Government recently announced two significant VAT measures: a general reduction in VAT rates, and a special reduction of the VAT rate applicable to solar panels.
Players in the Luxembourg real estate sector should pay specific attention to these new rules, as their practical implementation can in many instances raise questions.
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