Luxembourg Issues New Circular Revising VAT Rules for Company Cars and Repealing Previous Guidance

• A new Luxembourg circular issued on 21 October 2025 repeals previous 2023 guidance and changes how VAT on company cars is calculated.
• The circular aligns with a 2021 CJEU decision, especially affecting cross-border employees whose residence differs from their employer’s country.
• Stricter administrative requirements are introduced for VAT reimbursement when foreign VAT is paid.
• The taxable basis for VAT is now generally the “normal value” (market price), not reduced for professional use, and not lower than the employer’s costs.

Source: taxathand.com

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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