Company Car Benefit-in-Kind in Luxembourg: What It Really Costs You

Company cars are a common perk in Luxembourg — many employers offer them as part of a salary package, and they're particularly popular with sales teams, executives, and cross-border workers who drive long distances. But a company car is not free money: it generates a taxable benefit-in-kind (BIK) that adds to your gross income for tax purposes.

How the Benefit-in-Kind Is Calculated

Luxembourg uses a CO₂-based flat rate system for company car BIK. The taxable benefit is calculated as a percentage of the vehicle's list price (new price including options):

The taxable benefit per month = (list price × monthly rate). This amount is added to your gross salary before income tax and social contributions are calculated.

A Worked Example

• Monthly rate: 1.2%
• Monthly BIK: €40,000 × 1.2% = €480
• Annual BIK: €5,760 added to taxable income

• Extra income tax: ~€1,843/year
• Extra social contributions: ~€717/year
• Total annual BIK tax cost: ~€2,560/year (€213/month)

Electric Cars: A Much Better Deal

• Monthly BIK: €200 (vs €480 for a diesel equivalent)
• Annual extra tax cost: ~€890/year

This makes EVs particularly attractive for high earners in Luxembourg, especially given the country's growing charging infrastructure.

Is a Company Car Still Worth It?

• The car's list price and CO₂ emissions
• Whether private fuel is included (if so, an additional fuel BIK applies)
• Your marginal tax rate
• How much you'd spend on a private car instead

Calculate Your BIK Cost

[👉 Use the Luxembourg Car Benefit-in-Kind Calculator](/calculators/car-benefit-in-kind)

Enter the car's list price and CO₂ emissions to see exactly how much extra tax you'll pay each year — and compare petrol, diesel, and electric options side by side.