The automobile industry is in crisis: tens of thousands of employees must be laid off, sales of electric cars are stalling, while Chinese competition continues to grow. A period of crisis which also concerns companies and beneficiaries of company cars.
“In light of recent developments in the automotive sector and regulatory and tax changes, many questions arise,” explains the House of Automobile (HOA) in a press release issued Friday. These questions relate to a possible increase in leasing costs and the increased complexity of daily management.
Nearly 50% of company cars used by cross-border workers
This is why the House of Automobile organized a conference on Thursday evening at the Chamber of Commerce dedicated to these challenges. The umbrella organization House of Automobile brings together representative organizations from the automotive sector. Among them, Fedamo for dealers and garages, Mobiz for leasing and rental companies, and Febiac for manufacturers and importers.
Gerry Wagner, spokesperson for the HOA, highlighted “the great economic importance of company cars as well as their role in the country’s energy transition.” In total, around 19,000 company cars are sold each year, which corresponds to around 40% of private vehicle registrations. It is estimated that between 40 and 50% of these company vehicles are used by cross-border workers, which represents between 10,000 and 12,500 sales of private vehicles per year. Without a system for company cars, this market would fall entirely to neighboring countries.
An essential asset for talents
“If vehicles used by residents were transformed into privately owned vehicles, one would expect these vehicles to be owned on average twice as long,” the HOA points out. This would mean that the number of sales to individuals would be halved and, as a result, the annual number of sales and registrations would decrease by around 7,000 units.
“The company car remains an essential asset for attracting, motivating and retaining talent, in a context where the Luxembourg economy must remain competitive,” writes the HOA. Company cars promote “a newer, technologically advanced, safer and more environmentally friendly vehicle fleet”.
But the QM ruling, which requires companies that make company cars available to their staff across borders to check whether they are subject to VAT, plays a crucial role in this context and raises questions. “It does not reinvent the already existing VAT on the private use of the vehicle, but makes its application more complex, in particular via the rules of the country of residence and retroactivity, which requires adequate support. The benefit in kind remains very attractive, particularly for zero-emission vehicles until 2026, and the financial impact of the increase for combustion engine vehicles remains manageable,” concludes the HOA.
This article was originally published on the website of Luxembourg word.
Adaptation: Thomas Berthol
