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When purchasing a new or used vehicle in a European Union (EU) country, buyers must observe certain administrative formalities in Luxembourg.
The VAT regime differs depending on whether the vehicle is new or used, and whether the purchaser is a person not subject to VAT (an individual) or an entity subject to VAT (a company). Therefore, whereas an individual is required to file a special VAT return (Form 446-L) for the purchase of a new vehicle, companies are required to pay Luxembourg VAT, regardless of whether the vehicle is new or used.
Who is concerned
The following are concerned:
- private individuals (Luxembourg residents) who acquire a vehicle in an EU Member State;
- Luxembourg companies that purchase a vehicle in an EU Member State.
According to the VAT regulations in force, a vehicle is considered to be:
- a used vehicle if it has travelled over 6,000 km and if it was first operated more than 6 months previously;
- a new vehicle if it has travelled under 6,000 km or if it was first operated fewer than 6 months previously.
- a vehicle that has travelled 5,600 km is considered a new vehicle under the VAT rules, even if it has already been registered for 8 months;
- a vehicle that has travelled 7,600 km and has been registered for 4 months is considered a new vehicle under the VAT rules;
- a vehicle that has travelled 7,600 km and has been registered for 8 months is considered a used vehicle under the VAT rules;
How to proceed
Verification of the obligation to pay VAT in Luxembourg
Private individual buying a used vehicle from another private individual
No VAT is due on sales of used vehicles between private individuals.
Private individual buying a used vehicle from a professional
VAT is due in the country where the vehicle is purchased; no VAT is due in Luxembourg. However, the car must cleared by Customs (sticker 705).
Private individual buying a new vehicle from another private individual or a professional
VAT is due in the country of registration of the vehicle. This means that Luxembourg VAT (17 %) is due when the vehicle is registered in Luxembourg. Therefore, sales of new cars are invoiced exclusive of VAT in the country of origin and Luxembourg VAT must be paid regardless of whether the new vehicle is purchased from a professional dealer (such as a garage) or a private individual.
This means that the only condition that triggers the payment of Luxembourg VAT is related to the vehicle itself, which must have travelled fewer than 6,000 km or have been operated for fewer than 6 months (new vehicle).
Company buying a new vehicle from a professional
VAT is due in the country of registration of the new vehicle. In the case of an intra-Community acquisition of goods, the acquisition is reported as such in the section intended for the declaration of VAT, and taxed at the rate of 17 %. On the other hand, the input tax levied on this transaction is fully deductible.
Persons who purchase a vehicle themselves in an EU member state must be able to produce all necessary documents in the event of a roadside check, that is to say:
- a certificate of compliance issued by the manufacturer;
- a registration certificate;
- a certificate of insurance issued by an insurance company.
To drive through certain EU member states, a local insurance certificate may be required.
Company buying a used vehicle from a professional
Two situations may arise:
- the used car is subject to the special regime in which the profit margin is taxed (the tax base is equal to the difference between the sale price and the purchase price). In this case, the sale of the car is invoiced inclusive of VAT in the country of origin. The transaction does not qualify as an intra-Community purchase for the buyer in the strict sense of the term and is not to be reported as such. The car is only mentioned on the amortisation schedule. No input tax deduction is possible;
- the used car is subject to the normal tax regime. In this case, the sale of the car is invoiced exclusive of VAT in the country of origin. The transaction qualifies as an intra-Community purchase of goods for the buyer and is to be reported as such in the section intended for the declaration of VAT. The transaction is taxed at the rate of 17 %. On the other hand, the input tax levied on this transaction is fully deductible.
In the two cases mentioned above, the 705 sticker must be obtained from the Customs and Excise Agency (Administration des douanes et accises), except for cars coming from Belgium.
Presentation of the vehicle at Customs
Conditions for obtaining a 705 sticker
To obtain a 705 sticker, the purchased vehicle must be taken in, in person—by the private individual or a representative of the company—to one of the Customs and Excise Agency offices.
Private individuals or company representatives can contact the offices in Diekirch, Grevenmacher or the customs centre in Gasperich - P&R Lux-Sud / Luxembourg-City.
The 705 sticker is a document issued by the Customs and Excise Agency proving that a vehicle that has yet to be registered is in order with regard to VAT.
The person taking in the vehicle must produce the following documents to obtain the 705 sticker:
- the previous registration certificate (if the vehicle has already been operated);
- the original copy of the European Certificate of Conformity;
- the original invoice for the purchase of the vehicle, or the sales contract, or possibly proof of payment;
- the registration number that was requested beforehand if the vehicle does not have one;
- the insurance certificate;
- the national identification number (matricule - 13-digit social security number), or the tax registration number (11-digit number).
Private individuals must also provide the original copies of an identity document (identity card or passport).
All documents presented to the Customs and Excise Agency must be original copies. The documents will be returned by the Agency.
Additional formalities for private individuals purchasing a new vehicle
When the vehicle is considered to be new for VAT purposes, the private individual must also file a special VAT return (form 446-L).
The 446-L return form can be obtained from one of the Customs and Excise Agency offices (in Diekirch, Grevenmacher or the customs centre in Gasperich - P&R Lux-Sud / Luxembourg-City), and must be submitted to one of those offices.
The VAT due amounts to 17% of the purchase price. Payment of Luxembourg VAT by private individuals is to be made at the Customs and Excise Agency office, in euros.
When payment is made, the Customs and Excise Agency office will return part D of the 446-L return form to the private individual. This document serves as proof of payment of the VAT.
For persons subject to VAT, this formality is not applicable and payment is made via the 'normal' VAT return.
Issuance of the 705 sticker
When the formalities described above have been completed, the Customs and Excise Agency will issue a 705 sticker. This is required to register the vehicle at one of the 3 SNCA sites (Sandweiler, Esch-sur-Alzette or Wilwerwiltz).
As part of the registration procedure in Luxembourg, the vehicle must be taken in for a technical inspection to verify its technical compliance (the "acceptance" procedure) and to ensure that it is in good working order.
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