© Envato
While retailers will not be forced to lower their prices, they will nevertheless have to adjust VAT to the new rate on 1 January, according to Tom Baumert.
In an interview with our colleagues from RTL Radio on Friday morning, Baumert explained that "the announced 1% decrease in the VAT rate in 2023 does not imply a 1% reduction in product prices."
The aim of this measure is "to avoid that prices increase too quickly," he said, indicating that the |Luxembourg Trade Confederation (CLC) did not ask its members to lower their prices, instead opting for information and awareness campaigns.
The reduction has no effect on the special 3% rate, which applies to food, medicines, books and newspapers, as well as children's clothing. According to the CLC director, retailers will not be forced to lower their prices, but VAT will have to be adjusted to the new rate on 1 January 2023.
Baumert also discussed commercial transactions in the run-up to Christmas, noting that "business was not so bad." He commended Luxembourg's "positive Christmas spirit" and stated that "despite the bleak climate abroad, the feedback from shop owners was rather good."
This shows, according to Baumert, that opening a shop in Luxembourg is still worthwhile and that "the various shops have recovered well from the pandemic." Many retailers have also started selling online, either via their own website or on the letzshop.lu platform.
Finally, the number of bankruptcies in the retail sector has remained more or less stable in recent months. "We understand that customers are buying fewer expensive products or waiting for the sales to make good deals, but demand remains relatively high in Luxembourg,", Baumert concluded.
