• Service: Tax, Financial Services, Banking
  • Industry: Financial Services
  • Date: 10/8/2013


Laurence Lhote
+352 22 51 51 5534


Konstanze Ziegler
+352 22 51 51 5466

Luxembourg Tax News - Issue 2013-17 

October 2013

German VAT on Luxembourgish company cars used by cross-border commuters

Luxembourgish businesses providing company cars to their employees for both professional and private use perform a taxable service, which used to be subject to VAT at the place where the employer is established (i.e. Luxembourg).


Following a recent change in the place of supply rules, which came into force in Germany on 30 June 2013, the German tax authorities claim the right of taxation on the provision of company cars by Luxembourgish businesses to employees who work in Luxembourg and live in Germany. The German tax authorities state that the place of supply of the service is deemed to be where the employee has his place of residence based on the new place of supply rule applicable to long-term hiring of vehicles (i.e. company cars).


Should the interpretation of the German tax authorities hold, this change would lead to an increased administrative burden for Luxembourg businesses offering company cars to their employees (i.e. filing of VAT returns in Germany). Affected businesses should closely monitor the residency of their employees driving company cars and they may be obliged to register for VAT purposes in Germany to collect and report German VAT on a regular basis. The German “Finanzamt Saarbrücken” is in charge of all Luxembourgish businesses obliged to register for VAT in Germany.


However, there are some doubts as to whether this interpretation of the VAT Law is in line with primary European Law. KPMG Luxembourg is currently analyzing whether this interpretation of the German tax authorities constitutes an unjust restriction of the freedom of movement of workers (which is part of the fundamental freedom of movement of persons) and one of the four fundamental freedoms of the Common Market.


For further information, please do not hesitate to contact us.








The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


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