Update15/09/2021
On September 14, a new version of the bill for the greening of company cars was published. It is notable that all amendments related to the mobility budget seem to have been deleted. The parliamentary debate is expected in the coming weeks, keep an eye on our website for further updates.
Update 25/05/2021 - Car fiscality 2021-2031
Change is coming
It was recently announced that the Council of Ministers has agreed on Minister of Finance Van Peteghem's proposal. This proposal aims to use company cars as a lever to green the Belgian car fleet and thus achieve the 2030 climate objectives. The agreement is based on 3 pillars: the fiscal and social regulation of company cars, tax incentives for charging infrastructure and simplification and expansion of the mobility budget.
By elaborating the plans now for the coming years, the aim is also to provide employers and leasing companies with a clear and stable framework so that the necessary actions and adjustments can be started well in advance.
Although the proposal still has to be voted on and ratified, we have listed the most important changes and you can also view them in our one-pager.
LeasePlan e-Cademy
On 27/05/2021, we held a LeasePlan e-Cademy on the recently announced car tax reform. Click on the link below and relive the e-Cademy.
- Financial support for installing charging stations - Timing: from 1 September 2021
In cooperation with the regional governments, the federal government wishes to expand the charging infrastructure in Belgium. To this end, the federal government is providing tax incentives for private individuals and companies:
- Companies that install charging stations before 31 December 2022 and make them available to the public – for which they can charge a fee – can post the costs of doing so as up to 200% tax-deductible. Companies that install charging stations between 1 January 2023 and 31 August 2024 will receive a 150% deduction.
- Individuals who have a smart charging station installed at home between 1 September 2021 and 31 August 2024 at their own expense can include these costs as tax-deductible expenses up to a maximum of €1,500.
- A maximum 50% deduction for plug-in hybrids - Timing: From 1 January 2023
A significant change is also in the pipeline for plug-in hybrids. For models purchased from 1 January 2023, the consumption costs of petrol and diesel will only be tax-deductible up to 50%. This scheme will apply until 1 January 2026.
- Fewer tax breaks for cars with internal combustion engines - Timing: from 1 July 2023
From the 2026 assessment year (i.e. the 2025 income year), the tax deduction will be systematically reduced for new vehicles purchased from 1 July 2023, and will disappear completely in 2028.
The minimum deduction of 50% (and 40% for cars with emissions > 200g) will disappear from 2025. The maximum deduction is capped and will fall each year: this cap will start to come into effect from 2025 and will stand at 75%, before falling further to 50% in 2026, 25% in 2027 and finally to 0% in 2028.
- CO2 contribution increases for cars with internal combustion engines - Timing: from 1 July 2023
The calculated CO2 contribution (or solidarity contribution) for all petrol or diesel cars purchased from 1 July 2023 will be increased:
- In 2023: By a factor of 2.25
- In 2024: By a factor of 2.25
- In 2025: By a factor of 2.75
- In 2026: By a factor of 4.00
- In 2027: By a factor of 5.50
Note: The CO2 contribution only applies to people with the status of an employee, not to self-employed persons.
- Minimum CO2 contribution increases for all cars - Timing: from 1 January 2025
In addition to the announced increase in the calculated CO2 contribution, the minimum CO2 contribution will also be increased. From 2025, this will be as follows:
These amounts are also subject to indexation.
- Tax breaks for emission-free company cars only - Timing: from 1 January 2026
This is perhaps the measure that stands out the most. If you purchase a new car from 1 January 2026, you can only benefit from a tax break if the car is emission-free. In other words, only fully electric company cars are still tax-deductible in the current range. These will be 100% deductible up to and including 2026.
One exception to this rule is that light trucks with a conventional internal combustion engine shall remain 100% deductible.
- Commuting allowance for emission-free cars only - Timing: from 1 January 2026
The commuting allowance of €0.15 per kilometre shall only be deductible if the journey is made using an emission-free car.
- Cars within the mobility budget must be emission-free - Timing: from 1 January 2026
Cars selected and used under the mobility budget (this applies to the first pillar (greener cars) and second pillar (soft mobility)) must be emission-free.
- Reduced tax deduction for emission-free cars - Timing: from 1 January 2026
Between 2026 and 2031, emission-free cars will gradually become less tax-deductible, falling from 100% to 67.5%. Here the "grandfathering principle" applies: the deduction percentage applicable at the time of ordering shall remain valid for the rest of the term.
What we have described above is a summary of the agreements made by the Council of Ministers. As these agreements have not yet been officially ratified, it is possible that amendments may still be made during parliamentary proceedings. We will keep you informed of any further developments.
DISCLAIMER: What we have described above is a summary of the agreements made by the Council of Ministers. As these agreements have not yet been officially ratified, it is possible that amendments may still be made during parliamentary proceedings. We will keep you informed of any further developments.
Car taxes in 2021: clarifying in five questions and answers
NEDC 1.0, NEDC 2.0, WLTP... which acronym is applicable ?
NEDC 1.0, NEDC 2.0, WLTP... It has been unclear since 2017 - 2018 to fleet managers but also drivers of company cars which acronym applies. This is because each of these abbreviations corresponds to a CO2 value (which may differ greatly). However, these values are critical as they are used as the basis for the taxation of company cars. Moreover, it has to date been unclear which value would apply from 1 January 2021. This has now become clear. We are pleased to summarize this for you in five questions and answers.
1. NEDC, WLTP... what does it stand for?
NEDC 1.0: All cars registered prior to 1 September 2017 have been approved in accordance with the New European Driving Cycle (NEDC) fuel consumption and emission test, which has been in force for decades.
WLTP: All new models that have been put onto the market since 1 September 2017 and all cars registered since 1 September 2018 onwards have been tested in accordance with the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP), the emission values of which are closer to reality (and therefore significantly higher).
NEDC 2.0: We are currently in a transition period. For the cars that have already been WLTP tested, manufacturers were obliged until the end of 2020 to use a European legal formula to convert the WLTP value to the old NEDC standard, called the 'NEDC 2.0' value. As of 2021, automakers may (optionally) continue to calculate a NEDC 2.0 value for WLTP cars, but are no longer required to do so.
2. What are the European rules on vehicle certification?
These are the guidelines for manufacturers:
- Prior to 31 December 2020, they had to calculate an NEDC 2.0 value for WLTP cars using the WLTP value.
- Vanaf 1/1/2021 mogen ze deze NEDC 2.0-waarde nog steeds state (maar dat is optioneel).
- Until 31 December 2022, both values (NEDC 2.0 and WLTP) must be stated for plug-in hybrid vehicles.
3. What is FPS Finance's decision?
Regarding the tax calculations, the federal government allows you to choose between NEDC 2.0 and WLTP for now.
- Use the NEDC 1.0 value if the vehicle has been tested pursuant to the NEDC standard and only has one CO2-value.
- Use the WLTP value if the vehicle has been tested pursuant to the WLTP standard and only has a WLTP value.
- Use the NEDC 2.0 or WLTP value (free choice) if the car has been tested pursuant to the WLTP standard and both values are available for the vehicle.
4. Where can I find these CO2 values?
The NEDC values (if available) can be found under Point 49.1 of the vehicle's certificate of conformity. The WLTP values (if available) can be found under Point 49.4 of the same certificate of conformity. The "weighted combined" CO2 value must be taken for rechargeable electric vehicles and the "combined" CO2 value for other engines.
5. Tax deductibility and benefit-in-kind... but what about the Solidarity Contribution?
With regard to the Solidarity Contribution, which is also based on the CO2 value, the authority lies not with the tax authorities but with the NSSO (National Social Security Office). In the meantime, the NSSO has confirmed that they agree with the position of the tax authorities. The choice between WLTP and NEDC can therefore be extended for the calculation of the solidarity contribution. The minimum solidarity contribution for 2021 has been set at 27.54 EUR/month.
Frequently asked questions
Do the announced tax measures also apply to existing contracts? The new tax measures only relate to new orders.Which date is used to determine whether a car is subject to the new tax measures or not: the order date or the date of registration? The order date. The new tax measures relate to cars purchased from a given date.Suppose I order a petrol car in May 2023 and I am still driving it in January 2026. Will the tax deduction for this car continue to apply or not? Tax deductions will be phased out for cars purchased or ordered from 1 July 2023, and will disappear completely for cars purchased or ordered from 1 January 2026. For the petrol car in the example above, nothing will change; the current tax deduction rules will continue to be followed.Suppose I order a diesel car on a four-year lease on 1 June 2023. What will happen from 1 January 2026? As the car was purchased before 1 July 2023, the tax deductibility will remain unchanged for the entire lease period. The tax deductibility in 2026 will therefore be the same as the levels we currently see today. There will also be no change in terms of CO2 contributions.What will change for plug-in hybrid cars from 2023? Tax deduction: For plug-in hybrid cars ordered from 1 January 2023, the deductible costs for petrol or diesel will be limited to 50%. In addition, plug-in hybrid cars ordered from 1 July 2023 will fall under the phase-out scenario for non-emission-free cars, with the tax deduction gradually moving from 100% to 0% in 2028. CO2 contribution: The CO2 contribution for non-emission-free cars will increase gradually by a factor of 2.25 in 2023 and 2024, a factor of 2.75 in 2025, a factor of 4 in 2026 and a factor of 5.5 in 2027.What is the situation with the difference between 'real' and 'false' plug-in hybrids? The determination and tax treatment of a 'real' or 'false' plug-in hybrid remains unchanged.Which CO2 values are currently applicable for car taxation? NEDC 2.0 or WLTP? The ministerial agreement no longer refers to an effective date for the WLTP values. The choice between NEDC 2.0 and WLTP will therefore continue to be offered, provided that both values are stated on the certificate of conformity (COC). As the conversion to NEDC 2.0 has not been mandatory since 1 January 2021, we expect car manufacturers to communicate both values less often.What will happen to the benefit in kind? The formula for calculating the benefit in kind (BIK) will not be affected. However, the benefit in kind may be higher due to the higher WLTP value.Which conditions must be met for the company to be entitled to the increased deduction for charging stations? As a minimum, the charging stations must be accessible during or after office hours for employees, visitors and other users (such as residents).Are there tax benefits for private individuals with a charging station installed? Yes, a private individual who has a charging station installed between September 2021 and September 2024 can benefit from a one-off tax reduction. A number of conditions are attached to this. These include the following: the charging station must be installed by a recognised company; it must be possible to read and manage the charging station via smart software; and the private individual must be able to present an energy contract with 100% green electricity.As a company, I have charging stations installed at my employees' homes. Are these costs tax-deductible? These costs are not included in the incentive for an increased deduction. If the charging station is included in the lease contract for the car, these costs will follow the usual deductibility rules for electric cars, i.e. 100%.Are the announced tax measures final? At the end of May 2021, the Council of Ministers agreed on the proposal put forward by Minister of Finance Van Peteghem. The proposal was then forwarded to the Council of State for its opinion. Once the Council of State's opinion has been received, parliamentary proceedings will continue. Only once these steps have been completed will the measures become final.Consultancy Services
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