VW announced earlier this month that it will pay at least $1.2 billion to compensate some 80,000 US buyers of 3.0-liter diesel engines.
The duchy insisted that it was the victim of the row, despite having itself been one of seven countries sued by the European Union for failing to crack down on auto pollution.
"Luxembourg declares itself a victim of criminal and negligent acts, which led it to issue certificates of approval that it would not have if the tests had not been distorted," Luxembourg sustainable development minister François Bausch said late Monday.
The case does not name an individual "because we don't yet know who did what."
The Dieselgate scandal blew open when Volkswagen admitted in September 2015 that it installed software in 11 million cars worldwide that reduced emissions of harmful nitrogen oxides when it detected the vehicle was undergoing tests.
The European Commission launched legal action in December against authorities in Luxembourg, Germany, Britain, Czech Republic, Greece, Lithuania, and Spain for failing to ensure carmakers complied with the law.
VW announced earlier this month that it will pay at least $1.2 billion to compensate some 80,000 US buyers of 3.0-liter diesel engines as well as buying back or refitting their vehicles.
But it faces further pressure to compensate European motorists.
"Volkswagen should offer a kind of bonus or compensation to its European customers," EU justice commissioner Vera Jourova said after a meeting with VW boss Matthias Mueller in Brussels on Monday.
"EU consumers deserve a fair treatment and Volkswagen should move on that point soon. A solution is also in Volkswagen's interest."