Total cost of ownership of an electric company car in Luxembourg vs diesel

In Luxembourg, an electric company car costs the employer about €0.48 per kilometre over 4 years, against about €0.51 for a comparable diesel, in our example at 25,000 km a year. The bigger gap sits with the employee: the benefit in kind drops from 2 % to 0.5 % of the list price per month, which means several thousand euros less tax each year.

This article is written for CFOs and fleet managers. It sets out the TCO formula for leasing and purchase, assumptions based on Luxembourg prices in autumn 2026, a 4-year table comparing an EV, a diesel and a plug-in hybrid, the cost per 100 km, the effect of annual mileage, the real cost of charging depending on where the driver lives, and the levers that bring the total down. Voltaback measures home charging for more than 200 client companies and sees, every month, the line most comparisons leave out: where the car actually charges.

What is the total cost of ownership of a company car?

Total cost of ownership (TCO) adds up everything a vehicle costs over its time in the fleet, not just the lease payment. Fleets express it per kilometre so that cars with different mileages can be compared fairly.

The concept matters because the most visible figure, the lease payment or purchase price, is often higher for an EV and misleading. Only the sum of all items shows which car is cheaper, and for whom: the company, the employee, or both.

The TCO formula: leasing and purchase

The formula fits on one line:

TCO = lease (or depreciation and financing) + energy + maintenance and tyres + insurance + taxes + admin costs, divided by the kilometres driven.

Admin costs are the ones people forget: charging expense claims, mileage readings, fuel cards, fines. They are only a few percent, but they grow with the size of the fleet.

TCO per vehicle or per fleet?

You need both views. TCO per vehicle answers "which model for which driver?" and belongs in the car policy. Fleet TCO answers "what does mobility cost us in total?" and belongs in the budget. Between the two sit the costs that cannot be assigned to a single car: on-site charging points, fleet administration, software, pool cars. Calculating only per vehicle forgets these overheads; looking only at the fleet hides which drivers drive the costs.

TCO under operating lease

With full-service leasing, the usual model in Luxembourg, the monthly rental covers depreciation, financing and usually maintenance, tyres and insurance. TCO is the rental over the term, plus energy, taxes, admin and the costs at return: excess kilometres, damage, early termination. The leasing company carries the residual value risk, a real argument for EVs whose used prices are hard to predict.

TCO for a purchase

When the company buys, depreciation and financing costs replace the rental. TCO is then: net purchase price minus residual value at the end, plus interest, plus all running costs. Two Luxembourg features tilt the calculation towards the EV:

• a new zero-emission vehicle qualifies for the 12 % investment tax credit on the first €50,000 of acquisition cost; combustion cars are excluded;
• 17 % VAT is in principle deductible for a company with a taxable activity; specific rules apply when the car is made available to employees.

Two items sit outside the company's TCO yet deserve tracking: the employee's benefit in kind, which shapes salary talks and the appeal of your car policy, and the charging cost the driver absorbs when home charging is not reimbursed properly.

Residual value and battery

For a purchase, the residual value is the biggest unknown. Used EVs lose value at different speeds depending on the model and battery health, and new models with more range push down the prices of older ones. Manufacturers usually guarantee the battery for 8 years or 160,000 km at a minimum capacity; check the conditions of the actual model. If you do not want the residual value risk, lease. If you buy, use a cautious residual value and have the battery health documented at resale.

Putting a figure on admin costs

Admin costs are small per car, but not zero. An example with assumptions: if HR checks a charging expense claim with receipts and meter photos every month, 20 minutes per driver is quickly reached. For 50 drivers, that is 200 hours a year; at an internal rate of €50 an hour, about €10,000, or €200 per car per year. An automated export to payroll cuts this line close to zero and removes the errors of manual entry along the way.

The assumptions, with Luxembourg figures

We compare three mid-size company cars, leased over 48 months and 100,000 km (25,000 km a year). Lease, maintenance and insurance are market assumptions: replace them with your own quotes. Energy prices and taxes are sourced.

The electricity price: the charged kWh, not the average bill

The figure that matters is the marginal price of one kWh charged into the car: energy, the Creos per-kWh network fee (€0.0510 per kWh excluding VAT in 2026) and 8 % VAT. Electricity tax and the compensation mechanism practically cancel each other out for households in 2026. On a dual-rate offer from a major supplier, that comes to about €0.19 per kWh at night and €0.20 during the day.

The average household bill, around €0.26 per kWh, includes monthly fixed charges. It is not the cost of one extra kWh and overstates home charging. On the other hand, if charging pushes the household above its reference power, Creos adds €0.0765 per kWh excluding VAT, and the night kWh rises to about €0.27. Source: Creos, guide to the tariff structure.

Fuel and public charging prices

In Luxembourg, the Ministry of the Economy sets maximum fuel prices. Diesel averaged about €2.05 per litre nationally at the end of October 2026, petrol about €1.75. On the public Chargy network, a kWh costs €0.31 with a charging card and €0.50 with direct payment; some fast chargers exceed €0.65. Sources: fuel-prices.eu, European Commission Weekly Oil Bulletin, Paperjam, public charging prices compared.

For the EV we use a realistic mix: 80 % home charging at €0.19 and 20 % public charging at €0.31. To stay conservative, all energy prices include VAT.

EV vs diesel vs plug-in hybrid: 4-year TCO

The EV carries a higher lease but wins it back on energy: €3.85 per 100 km against €12.30 for the diesel. The plug-in hybrid sits in between, but only if the driver actually plugs it in. Driven mostly on petrol, it becomes the most expensive of the three.

Maintenance is cheaper for the EV, because oil changes, timing belt, clutch and exhaust disappear, and regenerative braking spares the brakes. Tyres, on the other hand, tend to wear faster because of the extra weight; the table combines both effects.

The same calculation for a purchase

If the company buys the cars, the picture changes. Assumptions: prices including VAT of €50,000 (EV) and €45,000 (diesel), VAT recovered, net residual value after 4 years of €15,000 and €14,000, financing costs of about €3,500 and €3,100. All figures are net, before corporate income tax.

For a purchase, the EV's lead is therefore much larger, mainly thanks to the tax credit, which only zero-emission cars get. In exchange, the company carries the residual value risk itself. The tax details, from depreciation to resale, are in our guide to electric company car taxation.

How much do 100 km cost in an EV and a combustion car?

The cost per 100 km is the most tangible comparison for drivers and fleet managers.

Even at a public charger with direct payment, the EV stays cheaper than the combustion car. The big gap, however, only appears when charging at home or at work.

Annual mileage changes the result

The more kilometres driven, the stronger the energy advantage. The simplified calculation below keeps lease, insurance, taxes and home charging equipment constant and lets only energy and maintenance rise with mileage. In reality, the lease rises with mileage for all three powertrains.

At around 15,000 km a year, the three powertrains are almost level for the company. From about 20,000 km a year, the typical profile of a cross-border worker commuting daily, the EV becomes clearly cheaper: at 40,000 km, by about 6 cents per kilometre, almost €10,000 over the term. On top of that comes the benefit in kind advantage, at any mileage.

Which taxes does an electric company car pay?

Road tax

For cars first registered from 2001, the annual tax is: CO2 emissions in g/km, multiplied by 0.9 for diesel (0.6 for other fuels), multiplied by a factor that starts at 0.5 below 90 g/km and rises with every 10 g. The ACL calculator gives the exact amount for a given model from the CO2 value on the registration certificate; more powerful combustion cars pay much more than our assumption. A fully electric car pays the €30 annual minimum. Source: ACL, road tax calculator. The full scale is explained in our article on road tax and electric cars.

VAT

Luxembourg has no blanket exclusion of VAT recovery on passenger cars. VAT is deductible when the car serves an activity that gives the right to deduct; for luxury vehicles out of proportion with the business, the administration can refuse the deduction as an entertainment expense. When the car is also made available to an employee for private use, the VAT administration's (AED) rules on company cars apply, and for cross-border workers VAT may in some cases be due in the country of residence. Source: Paperjam, VAT on means of transport.

The investment tax credit on a purchase

When a company buys a new zero-emission M1 passenger car, Luxembourg grants a tax credit of 12 % on at most the first €50,000 of acquisition cost. At €42,735 net, that is just over €5,100, deducted directly from corporate income tax. Under an operating lease, it goes to the leasing company, not to your company. Source: PwC Tax Summaries, Luxembourg.

What about the Klimabonus?

We deliberately left it out of the tables. The Klimabonus Mobilitéit is open to private-law legal entities, including on a lease if the owner waives it: €6,000 for an EV up to 16 kWh/100 km, €3,000 up to 18 kWh/100 km (or 20 kWh/100 km with 150 kW or less), capped at 50 % of the price excluding VAT, and the car must be kept for 36 months.

The current scheme, however, covers contracts signed up to 30 June 2026. Its extension to 30 June 2030, with unchanged amounts, depends on bill no. 8725, still under discussion in the Chamber of Deputies. Check its status before building it into a TCO. Sources: Guichet.lu, subsidy for an electric vehicle (legal person), gouvernement.lu, Klimabonus Mobilitéit.

The benefit in kind: the gap most comparisons miss

For the employee, the flat-rate benefit in kind on a company car is 0.5 % of the list price per month for an efficient EV (no more than 18 kWh/100 km, or 20 kWh/100 km with 150 kW maximum), 0.6 % for other EVs, and 2 % for combustion cars and hybrids registered from 2025.

The difference in taxable base is €7,800 a year. For an employee taxed at a 40 % marginal rate, that means more than €3,000 less tax every year. In a salary negotiation, that outweighs any option pack.

What the benefit costs the employer

The company feels the difference too. The benefit is remuneration subject to contributions, on which the employer pays its social contributions, in the order of 12 to 15 %. On a €3,000 benefit, that is about €360 to €450 a year; on €10,800, about €1,300 to €1,600. Over 4 years, the diesel adds about €5,200 to €6,500 of employer costs, the EV about €1,400 to €1,800, amounts that appear in no lease quote. Include them, and the diesel's TCO rises to about €0.57 per km, the EV's to about €0.49.

The 0.5 % and 0.6 % rates apply to contracts signed by 31 December 2026 and registered by the end of 2027. A draft Grand-Ducal regulation, approved by the Government Council on 24 July 2026, would extend them to contracts signed up to the end of 2030 and cut plug-in hybrids at 50 g CO2/km or less to 1 %. Until it is published in the Mémorial, it remains a draft. Source: Klima-Agence, benefits in kind for company cars.

All the details, including for cross-border workers, are in our article on the benefit in kind of an electric company car.

Home charging: the real cost depends on the country of residence

About 49 % of employees in Luxembourg are cross-border workers. They charge at home in Belgium, Germany or France, on an electricity contract from their country of residence. The cost of 100 km therefore varies a lot from one driver to the next.

What this means for TCO

Let us run our EV for a cross-border worker in Germany: 80 % home charging at €0.32 and 20 % public charging at €0.31. Energy over 4 years rises from €3,852 to about €5,720, and TCO to about €49,740, or €0.50 per km. The EV stays cheaper than the diesel, but its lead is halved. A fleet TCO that uses the Luxembourg price for every driver underestimates the energy costs of cross-border workers.

The practical consequence: a single kWh price set at Luxembourg level under-reimburses Belgian and German residents. The driver ends up paying part of the company car's energy out of pocket, and eventually charges on public networks, which costs everyone more.

Luxembourg has no official flat rate per kWh. In practice, under the Grand-Ducal regulation on benefits in kind, the electricity of a company car is a running cost covered by the flat rate, like fuel, provided the kWh actually charged are reimbursed at their real cost. No text says so explicitly, so have this reading confirmed by your fiduciary. For orders of magnitude, see our article on the cost of charging an electric car.

How Voltaback measures home charging

Voltaback reads the kWh charged straight from the connected car, across more than 48 brands, with no box and no mandatory wallbox. Voltaback relies on the home's MID-certified meter, not on a standalone cable meter, and applies each driver's real contract price, whether resident or cross-border. Our measurement has been audited by an independent third party: 1.22 % relative error.

Charging at work: what an on-site kWh really costs

Many companies rely on charging points on their own premises, 86 % according to the Arval barometer. The kWh there looks cheap, because it runs on the company's electricity contract. But TCO must include every component:

• energy and network at the business tariff, including the capacity component, which rises with every car charging at the same time;
• investment in charging points, cabling and possibly grid reinforcement, depreciated over their useful life;
• operation: back-end software, maintenance, billing, access management;
• utilisation: a charging point used only by a few cars during the day spreads its fixed costs over few kWh.

Once these items are counted, the on-site kWh is often no cheaper than the kWh charged at home at night, which the company reimburses at the driver's contract price without holding any infrastructure. For drivers with no way to charge at home and for pool cars, on-site charging nevertheless remains essential.

TCO from the driver's point of view

The company's TCO is only one side. For the driver, two items count: the taxed benefit in kind and any energy they pay themselves.

The middle column assumes 4,000 kWh of home charging a year by a cross-border worker in Germany who pays €0.32 per kWh and is reimbursed €0.19. The driver is still better off with the EV than with the diesel, but feels the gap is unfair, and it is easy to avoid. They often respond by charging in public or at the office, which raises the company's TCO.

Electric or combustion: which choice for which driver?

The average calculation helps the CFO, but the decision is made driver by driver.

The plug-in hybrid: only as good as its charging discipline

In our table, the plug-in hybrid drives half its kilometres on electricity, charged at home at €0.19 per kWh. If it drives only 20 % electric, the numbers change: 20,000 electric km cost about €680, and 80,000 km at 7 l/100 km of petrol at €1.75 about €9,800. Energy rises from €7,835 to about €10,480, and TCO to about €52,360, or €0.52 per km, more than the diesel. On top comes the 2 % benefit in kind, the same as a combustion car. A plug-in hybrid therefore only belongs in the fleet if its charging is organised, measured and reimbursed.

For the employee, the answer almost always favours the EV, because the benefit in kind is four times lower. For the company, it depends mainly on mileage and on where the car charges.

Common mistakes in TCO comparisons

• Using the average electricity bill price (about €0.26 per kWh) instead of the marginal price of the charged kWh: it makes home charging look more expensive than it is.
• Using the Luxembourg electricity price for every driver, although half of them charge abroad.
• Calculating only home or only public charging: reality is a mix, and the mix decides the result.
• Counting on the Klimabonus before its extension is voted.
• Leaving out the benefit in kind, although it drives employer contributions and drivers' acceptance.
• Using homologated consumption for plug-in hybrids, although they are often barely charged.
• Ignoring excess kilometres and return costs, which only appear at the end of the contract.

How TCO may evolve up to 2030

A 4-year TCO is a bet on prices and rules. Four variables deserve attention:

• Benefit in kind: the draft up to 2030 would secure the EV's advantage for contracts signed until the end of 2030. Without it, the rate for new contracts would rise to 1 % or 1.2 % from 2027, still half that of a combustion car.
• Klimabonus: the extension to mid-2030 with unchanged amounts is planned but not yet voted.
• Fuel prices: they move a lot; between 19 and 26 October 2026 alone, the average diesel price fell from €2.08 to €2.05 per litre. Every 10-cent move changes the diesel TCO in our example by about €600 over 4 years, and by almost €1,000 at 40,000 km a year.
• Electricity prices: in 2026, state support lowers household network costs. Whether and how much it continues is open. Dynamic tariffs and charging below the reference power remain levers in the driver's own hands.

Step by step: calculating your fleet's TCO

1. List the fleet: vehicles, powertrains, lease contracts with term, kilometres and rental.
2. Mileage per car from actual odometer readings, not from the contract.
3. Charging mix per driver: share at home, at work, on public networks.
4. Electricity price per driver: marginal price of their own contract, by country of residence.
5. Taxes and charges: road tax, benefit in kind, employer contributions on it.
6. Admin: hours spent on claims, checks, returns.
7. Compare per km, per driver profile and for the whole fleet.
8. Repeat: TCO is not a one-off calculation but an indicator that gets more accurate every month.

The hidden costs in fleet TCO

The first hidden cost is unplanned public charging. According to the 2026 Arval barometer of 300 Luxembourg companies, 70 % have adopted or plan electrified cars and 70 % cite charging as a hurdle, yet only 21 % use or plan home charging, against 86 % on company premises. Source: Paperjam, Arval barometer 2026.

Without organised home charging, our EV runs on the public network. At €0.31 per kWh with a card, energy rises from €3,852 to €5,580 over 4 years. With direct payment at €0.50, it reaches €9,000, and the TCO climbs to about €0.53 per km, above the diesel.

Other hidden costs:

• Flat reimbursements: a fixed amount never matches the real cost. Above it, the excess becomes taxable salary; below it, the driver feels short-changed.
• Admin time: charging expense claims, receipts, manual readings, checks.
• Untracked kilometres: without reliable readings, you cannot spot a lease mileage overrun before the car goes back. Excess kilometres are charged at the end of the contract at a rate per km.
• Return damage: scratches, wheels and interior are assessed at return; without a maintenance history, you have no arguments.
• Unplanned maintenance: a worn tyre or an ignored warning costs more at the end of the lease.

How to reduce your fleet TCO

1. Measure where each car charges

Home, company site, public network: without this split, you do not know what you are paying for. It is the basis of any charging policy.

2. Reimburse home charging at real cost

Measured kWh, valued at each driver's contract price and paid through payroll: the safest way to stay within the flat-rate logic, and the fairest for cross-border workers. Our home charging reimbursement solution produces a monthly export ready to import into your payroll software.

3. Track mileage without effort

Automatic mileage readings avoid surprises at the end of the lease and let you adjust contracts along the way. See our article on fleet mileage tracking.

4. Encourage eco-driving and anticipate maintenance

Smooth driving cuts consumption and tyre wear. Maintenance alerts sent by the car prevent breakdowns and end-of-lease repair charges.

5. Size on-site charging correctly

Charging points in the company car park make sense for drivers without home charging and for pool cars, but each one costs investment, connection capacity and admin. If you know how many drivers already charge at home, you build only as many points as you need.

6. Choose models with the benefit in kind in mind

An EV below 18 kWh/100 km (WLTP), or below 20 kWh/100 km with 150 kW or less, secures the 0.5 % rate. Check the figure on the certificate of conformity before signing.

To put numbers on these levers for your own fleet, try our home charging cost simulator. For the full roadmap, read our guide to fleet electrification in Luxembourg.

What this means for your company

The key insight for every role: for an electric company car, energy is the item with the widest spread. The lease is the same for every driver, but energy can range from €3.40 to €9 per 100 km depending on where the car charges and where the driver lives. Measure and steer this item and you control TCO; estimate it and you work with an average that no single driver actually has. Start with a two to three-month baseline before adjusting your car policy and budget, and repeat it every year.

Cut your fleet TCO with Voltaback

Voltaback measures the kWh each company car charges at home, at work and on public networks, reimburses home charging at each driver's real contract price, and tracks mileage, consumption and maintenance, without any box. 100 % software, ISO 27001 certified since 2 December 2025 and GDPR compliant: the company never receives drivers' geolocation.

Talk to our team to calculate the real TCO of your fleet, cross-border drivers included.