Company owners in Luxembourg usually provide company cars to their employees. The business owner makes a leasing arrangement and has a repurchase option that can be transferred to the employee, if both parties agree upon this. The employee has a great advantage by purchasing a company car - lower prices than the average market value. If you are an employee in Luxembourg and want to know more about your rights for purchasing a company car, our Luxembourg attorneys can help.

 

Until this recent change, the Direct Tax Authority in Luxembourg taxed the benefit in kind that was made from the price difference between the actual market price and the lower price with which an employee could have bought the company car. However, because the decision was contested in court by taxpayers in Luxembourg, the Luxembourg Administrative Tribunal decided that the taxable benefit should be capped. 

 

 

Employees in Luxembourg who want to purchase a company car cannot be taxed on more than 100% of the company car’s value. The tax benefit in kind is assessed according to the duration of the lease for the car (four or five years). It is generally more advantageous for the employee to purchase a car after a five year lease period, as the taxable benefit in kind is reduced even more, compared to a four year lease period (2,800 euros reduction for the four year lease and a 6,000 euros reduction for a five year lease).

 

Our Luxembourg lawyers can explain the capping method and the manner in which individuals can benefit from a preferential price for purchasing the company car at the end of the lease. You can contact our Luxembourg attorneys for any questions regarding your rights as an employee.