Share this post on

ECJ Case on VAT for Company Cars: Overview and Implementation in Luxembourg, France, Belgium and Germany

  • The VAT treatment of private use of company cars by employees has changed following a CJEU decision in 2021 > C-288/19 .
  • The decision affects employees who reside in an EU member state different from their employer’s.
  • Luxembourg, where many employees commute from neighboring countries, is particularly affected.
  • The decision states that when an employee sacrifices part of their remuneration for a company car, the employer is considered to provide a service and the supply is taxable in the employee’s member state of residence.
  • The tax base for the salary sacrifice arrangement is generally the employer’s cost in providing the car.
  • Luxembourg VAT authorities have issued circulars providing guidance on the implementation of the decision.
  • Belgium has also issued a circular acknowledging the decision and providing guidance.
  • France has not yet provided an official position on the implementation of the decision.
  • Germany requires registration and filing of VAT returns as from 2014.
  • Penalties and interest for past due payments have not been imposed by VAT authorities so far.
  • Employers should consider the decision, assess its impact on their car policies, and take necessary actions to address VAT obligations in other member states.


Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.


VAT news
VAT news


  • vatcomsult