Electric vehicle subsidies: grants

The Luxembourg government actively encourages the adoption of electric vehicles by offering financial assistance and tax benefits. These incentives help reduce the price gap between traditional vehicles and those with low CO2 emissions, thereby facilitating the transition to greener mobility.

However, the conditions for subsidies will change from October 1, 2024, particularly for plug-in hybrid vehicles, which will no longer be eligible for subsidies.

New subsidy amounts for electric vehicles

Less favorable subsidies for electric vehicles

October 1, 2024, marks a turning point in financial assistance for the purchase of electric vehicles in Luxembourg. Subsidies for plug-in hybrid vehicles will be eliminated, but substantial subsidies will remain available for 100% electric vehicles. These subsidies are based on the vehicle's energy consumption:

• A maximum of €6,000 for the purchase of a 100% electric car with energy consumption of less than 160 Wh/km.
• A maximum of €3,000 for the purchase of a 100% electric car with energy consumption between 161 Wh/km and 180 Wh/km.

What are the eligibility criteria for electric vehicle subsidies?

Eligibility for subsidies is based on the energy consumption of the vehicles. For example, an electric Peugeot 2008 would be just eligible for the maximum subsidy of €6,000.

Concrete example: For a car priced at €30,000 including tax:

• With a subsidy of €6,000 for a vehicle consuming 150 Wh/km, the purchase price would be reduced to €24,000.

Expert opinion: " We recommend that you carefully check the energy consumption of your electric vehicle before purchasing, as consumption above 160 Wh/km is quite common." – ACL – the mobility specialist in Luxembourg

Eligibility criteria for electric vehicle subsidies

Families of more than four people are eligible for subsidies when purchasing an electric vehicle

Certain categories of individuals are eligible for additional subsidies, particularly large families or those purchasing used vehicles.

• Aid for large families to purchase an electric vehicle: Families with at least five members are eligible for additional aid of up to €6,000 for the purchase of a vehicle with seven or more seats.
• Subsidies for the purchase of used electric vehicles:A subsidy of €1,500 is available for the purchase of used electric vehicles that are morethan three yearsold , enabling more households to access clean vehicles.

Financial assistance for the purchase of electric bicycles

In addition to cars, other types of vehicles are eligible for specific financial support.

• Electric motorcycles and mopeds: Financial assistance amounts to 50% of the cost excluding VAT, with a ceiling of €1,000. From October 1, 2024, the minimum ownership period will increase from 1 to 3 years.
• Electric bikes: Aid for electric bikes remains at 50% of the cost excluding VAT, with a ceiling of €600, but from October 1, 2024, this aid will be reserved for people from households receiving the cost-of-living allowance or the energy bonus.
• Electric cargo bikes: New assistance is available for cargo bikes, covering 50% of the cost excluding VAT, with a ceiling of €1,000.
• Electric quadricycles: Quadricycles are eligible for the same subsidy as motorcycles, i.e., a maximum of €1,000, covering 50% of the cost excluding VAT.

Be aware of the ATN and vehicle charging stations

What is the ATN and how much is it?

The Luxembourg government aims to have 49% of the national vehicle fleet made up of electric cars by 2030. This translates into tax benefits for employees with company cars.

The ATN (Avantage en Nature) is a tax that employees must pay for the private use of their company car. It is calculated based on the purchase price of the vehicle, its type of engine, and its CO2 emissions.

• For a 100% electric car, the ATN is set at between 0.5% and 0.6% for 2024 and will rise to 1% or 1.2% from 2025 depending on consumption.
• For plug-in hybrid cars, the ATN will be 2% from 2025, while for other engines, it may reach 2%.

Rates applicable for in-kind assistance on vehicles in Luxembourg

Vehicle type	2024	From 2025
100% electric cars	0.5% to 0.6	1% if consumption ≤ 18 kWh/100km 1.2% if consumption > 18 kWh/100km
Plug-in hybrid cars	variable rate depending on CO2 emissions	2
Other engines	rate up to 1.8%	2

ATN comparison for a €40,000 car (from October 1, 2024):

• Electric car: ATN of €400
• Plug-in hybrid car: ATN of €800
• Internal combustion engine car: ATN of €800

This means that you will have to declare approximately €5,000 in ATN for an electric 2008, compared to €9,600 for a combustion engine 2008.

Suppose you are single and declare €50,000 per year in income. At an average tax rate of 32%, the additional annual tax would be €1,536 for an electric car.

Expert opinion: "Benefits in kind are considered an integral part of an employee's remuneration and are therefore included in the contribution base for calculating social security contributions, which increases contributions for both the employer and the employee."–ACL – the mobility specialist in Luxembourg.

Subsidies for private electric vehicle charging stations

Luxembourg also supports the installation of private charging stations. This measure aims to remove barriers to the adoption of electric vehicles by reducing the costs associated with installing charging infrastructure.

• Simple stations: Maximum subsidy of €750.
• Smart charging stations (OCPP): Assistance of €1,200 for individual stations and €1,650 for stations integrated into a collective smart charging management system.

The average cost of installing a charging station is between €1,200 and €3,000 including tax. This price includes the station itself, installation equipment, and labor. It is also possible to install a reinforced socket at a reduced cost (between €700 and €1,000 including tax), but this solution does not qualify for government subsidies.

What electric vehicle subsidies are available for businesses?

Businesses that invest in electric vehicles also benefit from significant tax advantages.

• Tax depreciation: Until 2026, electric vehicles are 100% tax deductible. For example, for an electric vehicle worth €40,000, the annual depreciation would be €8,000 per year, with 100% deductible .
• Deductibility of operating costs: Companies can also deduct 100% of the costs associated with the purchase, maintenance, and use of electric vehicles until 2026. This deductibility will be gradually reduced from 2027, reaching 67.5% in 2031.

In conclusion, the adoption of electric vehicles in Luxembourg is strongly supported by the government through a series of financial aids and tax incentives. However, these benefits will change in 2024.

From October 1, subsidies for plug-in hybrid vehicles will be abolished, while 100% electric vehicles will continue to benefit from significant support, including maximum subsidies of up to €6,000.

Large families and low-income individuals will continue to benefit from additional subsidies. In addition, the benefits in kind for electric cars remain attractive, although an increase is planned for 2025.

Luxembourg is thus continuing to encourage the transition to more sustainable mobility while adjusting its subsidies to adapt to new environmental priorities.

More information on soft mobility in Luxembourg.