VAT treatment of cross-border company cars

On 20 January 2021, the Court of Justice of the European Union ("CJEU") released a decision in case C-288/19, concerning the VAT treatment of company cars provided by a Luxembourg established employer to its staff employees, residing in Germany.

In this decision, the CJEU had the opportunity to clarify the conditions under which the professional and private use by an employee of a company car put at his disposal by an employer is subject to VAT.

Following the CJUE’s decision, the Luxembourg VAT authorities issued a Circular 807 on 11 February 2021 confirming the application of the ruling of the CJUE.

The VAT treatment of cross-border company cars resulting from the above CJUE decision and the Circular may (in certain circumstances) have negative consequences for Luxembourg established employers providing company cars to commuting employees.

Please refer to our article for more information.