Exclusive Use, Exclusive Rules: Refining VAT and Payroll Treatment for Company Cars
Exclusive Use, Exclusive Rules: Refining VAT and Payroll Treatment for Company Cars
Luxembourg’s Circular 807-1 fine-tunes the QM framework — confirming the “exclusive-use” concept and full taxation of the deemed lease to employees.
Background
On 30 October 2025, the Luxembourg VAT authorities (Administration de l’Enregistrement, des Domaines et de la TVA – AEDT) published Circular n° 807-1, dated October 21, 2025 which repeals Circular 807bis (April 2023) and complements Circular 807 (February 2021).
Circular 807-1 does not change the VAT regime introduced after the CJEU QM judgment (C-288/19); it clarifies and tightens the rules for company cars, primarily by confirming the “exclusive-use” interpretation and its consequences for VAT, payroll, and cross-border compliance.