Reform: benefit in kind of company cars
Last week, the Council of Government approved the draft Grand-Ducal Regulation aimed at updating the benefit-in-kind regime for company cars in order to stimulate employees to choose a vehicle with zero or low CO2 emissions.
The House of Automobile Luxembourg, which brings together the various automotive organisations, has closely followed this project in dialogue with the Ministry of Finance, the Ministry of the Environment and the Ministry of Mobility and Public Works in charge of this reform.
Since 1 January 2017, the benefit in kind of the private use of the company car was no longer taxed at a flat rate of 1.5% but according to a table taking into account the motorisation and the CO2 emissions. With the new reform, 3 schemes are now applicable for the calculation of the benefit in kind.
What are the different schemes applicable under this reform?
Scheme A (current):
Benefit in kind taxed at a flat rate of 0.5% for electric vehicles and 0.5% to 1.8% for internal combustion engines depending on CO2 emissions: ➡️ Any vehicle ordered and registered before 31/12/2021 ➡️ Any vehicle ordered before 31/12/2021 with registration before 31/12/2022
Regime A then regime B:
➡️ Any vehicle ordered from 01/01/2022 and registered before 31/12/2022: scheme A for the year 2022 and scheme B from 2023.
Benefit in kind taxed at a flat rate of 0.5% (consumption ≤ 18 kWh/100km) and 0.6% (consumption > 18 kWh/100km) for electric vehicles. Benefit in kind taxed at a flat rate of 0.8% to 1.8% depending on CO2 emissions (with a ceiling lowered from 150 g/km to 130 g/km for combustion engines): ➡️ All orders from 01/01/2022 with registration until 31/12/2024 (except in 2022: scheme A)
All vehicles except 100% electric taxed at 2% (1 or 1.2% for EVs) ➡️ All vehicles ordered and registered from 01/01/2025
💡 Our advice: anticipate delivery delays due to the semiconductor shortage and place your orders before 31/12/2021. You will also continue to benefit from the current scheme (A) for the entire duration of the contract (unless the initial duration is extended for > 6 months).
Orders placed from 01/01/2022 onwards will switch to scheme B from 2023.