Compulsory third party liability insurance
The owner of a vehicle which causes material damage, physical injury or death is held responsible. To ensure cover for such damage, the law requires all owners to insure their vehicle by taking out a third party liability insurance with an approved insurance company.
Please note that insurance of this kind only covers damage to third parties!
Insurance premiums are determined by the insurance companies. They usually allow a reduced premium ('bonus') to drivers who have not caused any accidents, and apply an increased premium ('malus') to drivers who have caused an accident.
All the other types of insurance cover for vehicles, such as passenger insurance, driver insurance, full insurance ('casco') and legal protection cover are not compulsory.
With some exceptions, all fuel-powered vehicles (cars, vans, lorries, etc.) registered or authorised to use the roads in the Grand Duchy are liable to pay a tax.
Vehicle tax is calculated according to:
- either carbon dioxide (CO2) emissions for vehicles first registered on or after 1 January 2001 (the amount of the tax is calculated on the basis of a formula according to the vehicle's emission level);
- or horsepower for vehicles registered before 1 January 2001.
The Customs and Excise Agency (Administration des douanes et accises) is responsible for collecting the vehicle tax. It notifies the vehicle's owner or holder of the amount of the vehicle tax to be paid. Payment is due before the vehicle is put on the road; proof of payment takes the form of a tax vignette. The vignette should be kept in the vehicle with the other papers and be presented if a roadside spot-check is made.
More information on vehicle tax on the website of the Department of Transport.