Frontier: buy your car in Luxembourg?
When buying a new vehicle , people living near the border may consider buying it in the Grand Duchy. But is it synonymous with good business? We help you to see more clearly.
A more interesting VAT, with one condition
If you decide to buy your car in the Grand Duchy, you will certainly win because the price of vehicles is cheaper than in France and Belgium , about 10%.
The reduced price of cars is not the only attractive element, there is also the cost of VAT. In Luxembourg, it is 17% (it was 15% until 31 December 2014), where it is 20% in France and 21% in Belgium. However, to benefit from this advantageous rate, it is mandatory to register your car in the Grand Duchy . If you do not have the possibility, because you are not installed in Luxembourg, then you will have to pay the VAT practiced in your country of residence. Note that this will not be the case if you invest in a used car . A vehicle is considered used if it meets two conditions: its first entry into circulation must be more than six months old and its mileage be more than 6,000 kilometers.
What if the seller claims VAT?
As part of a purchase made in the European Union, new cars are sold excluding VAT . However, it is possible that your dealer requires payment of VAT at the time of sale.
In this case, have him write a paper in which he undertakes to repay you the full sum as soon as you have been able to provide evidence of the export of the car. See with him what will be the practical arrangements for you to repay, and the documents you need to send him.
Registration in Luxembourg
When registering, only possible if you have an address in Luxembourg, you will be obliged to pay a circulation tax , collected by the Customs and Excise Administration. In exchange for your payment, you will receive a sticker, which must always be in your vehicle (but there is no obligation to stick it on your windshield).
Remember that you will also have to pay traffic tax. It is calculated on the basis of the CO2 emission of your vehicle. If the model you bought is highly polluting, you will be more heavily penalized.
In summary…
If you live not far from the Luxembourg border, it is interesting to buy a new vehicle in the Grand Duchy , since its total cost will be cheaper than in France or Belgium.
On the other hand, you will be obliged to register it in your country of residence and, therefore, to pay VAT. So remember, when making your purchase, to warn the chosen garage that your car is destined for export.
On the contrary, if you are settled in Luxembourg, you will pay the tax practiced in the country (17% on vehicles), and will have Luxembourgish plates, regardless of your nationality.