Electric vehicle subsidies: grants

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

However, the terms of these incentives are changing. Check out our latest blog post on the topic.

New subsidy amounts for electric vehicles

Less favorable incentives for electric vehicles

Financial incentives for purchasing electric vehicles in Luxembourg are quite attractive for 100% electric vehicles. These incentives are based on the vehicle’s energy consumption:

• Up to €6,000 for the purchase of a 100% electric car with energy consumption below 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 vehicle’s energy consumption. For example, an electric Peugeot 2008 would just qualify for the maximum subsidy of €6,000.

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

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

Expert opinion: “We recommend carefully checking your electric vehicle’s energy consumption before purchasing, as consumption exceeding 160 Wh/km is quite common.” – ACL – the mobility specialist in Luxembourg

Eligibility criteria for electric vehicle subsidies

Families of more than 4 people qualify for electric vehicle purchase incentives

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

• Assistance for large families purchasing an electric vehicle: Families with at least five members are eligible for additional assistance 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 more than three yearsold , making clean vehicles more accessible to more households.

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 cap of €1,000. Starting October 1, 2024, the minimum ownership period increases from 1 to 3 years.
• Electric bicycles: Financial assistance for electric bicycles remains at 50% of the cost excluding VAT, with a cap of €600, but starting October 1, 2024, this assistance will be reserved for individuals from households receiving the cost-of-living allowance or the energy bonus.
• Electric cargo bikes: A new subsidy is available for cargo bikes, covering 50% of the cost excluding VAT, with a cap 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 for 49% of the national vehicle fleet to consist of electric cars by 2030. This translates into tax benefits for employees with company cars.

The ATN (Benefit in Kind) is a tax that the employee must pay for the private use of their company car. It is calculated based on the vehicle’s purchase price, its engine type, and its CO2 emissions level.

• For a 100% electric car, the ATN is set between 0.5% and 0.6% for 2024 and will rise to 1% or 1.2% starting in 2025, depending on fuel consumption.
• For plug-in hybrid cars, the ATN will be 2% starting in 2025, while for other engine types, 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/100 km, 1.2% if consumption > 18 kWh/100 km
Plug-in hybrid cars	rate varies depending on CO2 emissions	2%
Other engine types	rate up to 1.8%	2%

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

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

This means you’ll have to report approximately €5,000 in ATN for an electric 2008, compared to €9,600 for a gasoline-powered 2008.

Suppose you are single and report €50,000 in annual 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 compensation and are therefore included in the contribution base for calculating social security contributions, thereby increasing 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.

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

The average cost of installing a charging station ranges from €1,200 to €3,000, including tax. This price includes the station itself, installation materials, and labor. It is also possible to install a heavy-duty outlet at a lower cost (between €700 and €1,000 including tax), but this solution does not qualify for government grants.

Want to equip your home with solar panels? Check out our full article on the topic.

What electric vehicle incentives are available for businesses?

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

• Tax depreciation: Until 2026, electric vehicles qualify for 100% tax deductibility. For example, for an electric vehicle valued at €40,000, the annual depreciation would amount to €8,000 per year, with a 100% deductible amount .
• Deductibility of operating costs: Businesses can also deduct 100% of costs related to the purchase, maintenance, and use of electric vehicles through 2026. This deductibility will be gradually reduced starting in 2027, reaching 67.5% by 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.

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

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

Luxembourg thus continues to encourage the transition toward more sustainable mobility while adjusting its support measures to align with new environmental priorities.

More information on sustainable mobility in Luxembourg.