Buying a car in Luxemburg: simplified procedures

Registration and payment of the road vehicle tax are the preconditions for putting your new vehicle on the road.

However, nothing could be easier, even for newcomers. Most of the time, these steps are taken by the dealer making the sale.

However, in Luxembourg, it is necessary to have car insurance coverage in order to be able to register your vehicle.

17% VAT on new vehicles

What is a new vehicle? According to the tax definition, it is a vehicle that is less than 6 months old or has travelled less than 6,000 km.

To insure a new vehicle, it is better to play it safe. In the event of an accident, if your new car is beyond repair, AXA’s Auto Privilege package allows you to buy the same car at its current price for 3 years.

AXA considers a vehicle as new until it is 12 months old. It can thus benefit from the 3-year coverage, even if it is no longer considered new for tax purposes.

You can also choose to buy your new vehicle abroad; the 17% VAT rate remains applicable, since it is linked to the country of registration.

But be aware that in this case, it is likely that your dealer will not know what steps to take to register your vehicle. No problem: your car insurer can assist you, by offering registration services. Once your vehicle is imported into Luxembourg, AXA’s Registration Service allows you to have your vehicle delivered directly to your home with its new number plates fitted, without having to worry about it.

Sustainable mobility: discounts for eco-friendly vehicles and taxes for polluting vehicles

Highly committed to reducing the ecological impact of travel, the Luxembourg government grants financial advantages to applicants to promote greener mobility. Thus, since May 11, 2020 if you buy a new zero-emissions car, i.e. one with an engine powered by electricity or hydrogen leads to a purchase discount of €8,000.

This financial aid of 8,000 euros, introduced in the context of the program “Neistart Lëtzebuerg”, is maintained for 100% electric cars, provided that the vehicle ‘s electrical energy consumption does not exceed 180 Wh/km (this is equivalent to 18 kWh/100 km).

This threshold is extended to 200 Wh/km (which is equivalent to 20 kWh/100 km), under the condition that the maximum net power of the 100% electric car’s propulsion system is inferior or equal to 150 kilowatts.

The subsidy of 3,000 euros has also been extended for cars with an electric energy consumption exceeding the threshold of 180 Wh/km.
The same applies to the 8,000 euros subsidy for cars with 7 or more seats, on condition that the applicant lives in a household of at least five people, to take the needs of large families into account.

These provisions apply to vehicles ordered between April 1, 2022, and March 31, 2024 and which are first registered for circulation before the end of 2024, taking delivery times into consideration.
Finally, in order to avoid an “export” of state subsidies, the duration of the minimum holding period has been increased from 7 to 12 months for all vehicles subject to registration. This provision will apply to all vehicles ordered before April 1, 2022.

Find all the latest information on the Guichet.lu portal.

On the other hand, the Luxembourg government has also established a support scheme for the installation of private charging stations, powered by green electricity.

This measure is considered more advantageous and a greater incentive, and for residents it replaces the tax benefit model that was implemented in 2017.It is therefore not possible to combine a purchase discount and tax deductions.

Note that since 2020, the Luxembourg State has applied a new calculation method to assess the environmental impact of motorised vehicles.

For electric and hybrid vehicles, the rules remain the same: emissions must be less than or equal to 50g of CO2/km to benefit from a purchase discount. However, the calculation is based on a new standard, the “Worldwide Harmonised Light Vehicles Test Procedure” (WLTP), allowing an estimate of CO2 emissions that is closer to reality than the old calculation method. The new calculation method has been applied to vehicles put on the road from January 2021.

This new standard also has an impact on the calculation of the annual tax on road vehicles, which is also based on your vehicle’s emissions: the more polluting your vehicle is, the higher the tax to be paid each year. Here, only vehicles put on the road from 1 March 2021 are affected by the new calculation method.

Also on the insurance side, green mobility allows you to benefit from discounts on your insurance premium.

The Autofestival, the High Mass of the automobile

Nearly one-third of annual new vehicle sales are made during the motor show.

At the beginning of each year, during 10 days, nearly 30,000 visitors come to one of the country’s 75 car dealerships for 10 days. In 2024 the Autofestival will last for two weeks, from January 20 to February 3.

On the event programme: new models, limited series to try but also special discounts...

The speciality of the festival is to bring together families looking for the right deal, as well as the curious and lovers of beautiful engineering.

Like Thomas, a young student from Luxembourg who dreams of owning a Jaguar one day. “I go there every year with friends. Luxury brands also get involved in the event. And the salesmen are happy to welcome us, even if we’re only there to look.”

But the Autofestival is also a way to do good business. An exceptional discount, accessories or options offered, each manufacturer is looking for a way to stand out. And the buyers know the difference.