Understanding VAT Treatment of Company Cars in Luxembourg

• Luxembourg Tax Administration clarifies VAT treatment of company cars
• Employers in Luxembourg subject to 17% VAT rate for company cars provided to employees
• Employers can fully recover VAT incurred on related costs
• Supply of services deemed to take place in Luxembourg if employer provides company car against remuneration
• Taxable amount on leased company cars equals costs incurred by employer
• Taxable amount on purchased company cars equals depreciation value for five years
• No exemptions or reduced VAT rates for company cars in Luxembourg, standard rate of 17% applies

Source: vatit.com

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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.

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