Private car leasing is rising in popularity in Luxembourg, with the flexibility and duration of the contract making this an attractive option to acquire a vehicle for many buyers. Some people may look abroad, to Germany or France for example, where prices are lower, the selection is broader, or the terms more flexible. But it is not that simple for a Luxembourg resident to lease a car from a different EU country as a private individual.
Although the EU guarantees the free movement of goods and services, there are no uniform regulations regarding car leasing for private individuals. Each country has its own rules:
As a result, a Luxembourger who leases a car in France will have to sign a French contract governed by French law. In the event of a dispute, this would be referred to the French courts, which represents a considerable effort.
Car registration represents a key issue here. If a permanent Luxembourg resident leases a vehicle to use in their country, the vehicle must be registered in Luxembourg, even if the lease was signed in Germany or France. If the vehicle comes from abroad, it will be subject to Luxembourg VAT (17%). Private individuals cannot claim back foreign VAT, and additional costs may be incurred if the vehicle does not comply with Luxembourg standards. Many leasing companies abroad also do not offer any assistance with registration or taxation in the Grand Duchy.
As a result, cross-border leases are frequently impossible. The majority of banks or dealerships which own a vehicle will refuse the registration in another country. This is their right as the vehicle owner, says Jean-Loup Stradella of the European Consumer Centre.
If the car cannot be registered in Luxembourg, then the lease must be abandoned. A driver with their main residence in Luxembourg must register it here if they wish to drive it in the Grand Duchy on a permanent basis.
In some cases the leasing contract will only cover servicing and repairs in the country of origin, at the dealership where it was signed, which can complicate matters in the event of an issue with the vehicle.
As a general rule, it is easier to sign a lease in your country of residence. Deals abroad may be enticing, but the difficulties around signing a lease make it prohibitive for many. Naturally, there are exceptions to the rule, but these are few and far between.
Buyers should also pay close attention to the terms of the contract. If they take out a lease in Luxembourg but plan to move abroad in the near future, this could breach the contract, or cause difficulties in registering the vehicle abroad. In such cases, the contract could be terminated with high fees, warns Stradella.
It is therefore advisable to research all terms and conditions prior to signing a contract. If you require assistance, contact the Luxembourg Consumer Union or the European Consumer Centre.
