Company car (Tax benefit)

What is the company car tax benefit? — The company car tax benefit (Avantage en nature) is a taxable benefit provided to employees who use a company car for private purposes. The value of this benefit is calculated based on the CO2 emissions and motorization type of the vehicle, with rates adjusted annually to promote environmentally friendly vehicles and reduce carbon footprints.

How is the company car tax benefit calculated? — The taxable benefit is determined using a percentage of the car's gross list price, depending on its CO2 emissions and type of motorization, with the following rates applying for 2024:

What changes are coming in 2025? — The company car tax benefit calculation will undergo significant changes to further encourage sustainable mobility:

How are the CO2 emission categories determined? — The car's registration certificate and conformity certificate indicate its emission category. For cars registered:

What is the impact on employee taxation? — The company car tax benefit is added to the employee's monthly gross income and is subject to both income tax and social security contributions. For employers, the benefit also impacts the employer's social security contributions.

What costs are included in the gross list price? — The gross list price includes the vehicle's base price and all optional extras, including VAT, but excludes any manufacturer or dealer discounts. For leased vehicles, the gross list price is used rather than the lease price.

Can employees reduce their company car tax benefit? — Employees can minimize their tax liability by choosing vehicles with lower CO2 emissions or electric/hydrogen vehicles. Some employees may also contribute to the cost of the vehicle, which can adjust the taxable benefit calculation.

Why is the company car tax benefit system important? — The company car tax benefit calculation encourages the adoption of low-emission and electric vehicles by offering lower tax rates, supporting Luxembourg's environmental sustainability goals while providing employees with tax-efficient benefits. It also aligns with the EU's broader climate objectives.

Synonyms: Company car natural advantage, benefit in kind for vehicles, car fringe benefit, company vehicle taxation, automobile tax benefit, car benefit assessment.