Taxation of company cars

If employees are also allowed to use their company cars for private purposes, the employer has to pay a CO2 contribution (also known as a solidarity contribution) to the National Social Security Office (NSSO). This contribution is based on the vehicle's CO2 emissions and fuel type, and is calculated using a formula. In addition, a minimum contribution is determined.

The formula for calculating the CO2 contribution is as follows:[((CO2 emissions x €9) - 768 (petrol) or 600 (diesel) or 990 (LPG)/12] x index coefficient

The index coefficient and minimum contribution are adjusted annually. For 2024, the index coefficient is 1.5359 and the minimum contribution is €31.99 per month. The minimum amount is payable for zero-emission cars.

For non-zero-emission cars ordered from 1 July, the result of the formula calculation must be multiplied by a multiplier that increases annually. In 2024, this multiplier stands at 2.25. If, after applying the multiplier, the calculated CO2 contribution is lower than the minimum contribution, the minimum contribution shall apply.

Anyone driving a company car and who is permitted to use it for private purposes enjoys a benefit in kind (BIK). However, an employee pays taxes on this benefit in kind. The amount of the benefit in kind is calculated using a formula that takes into account the vehicle's list price, age and, above all, CO2 emissions. The more the CO2 emissions of an employee's vehicle deviate from the 'reference emission level', the higher the benefit in kind. For zero-emission cars, the minimum CO2 percentage of 4% shall be applied.

The reference emission level is calculated each year using the average emissions of newly registered cars in the previous year. A minimum benefit in kind is also set each year. For 2024, the reference emission level stands at 78 g/km for petrol cars and 65 g/km for diesel cars. The minimum benefit in kind for 2024 is set at €1,600 per year.

The formula for calculating the benefit in kind is as follows: List value x CO2 percentage x 6/7 x age percentage

Company car costs are (partially) deductible from a company's taxable income and therefore lead to lower corporation tax.

The deductibility in 2024 varies depending on the type of costs and the type of car:

• Interest costs, including non-recoverable VAT: 100% deductible; this applies to zero-emission and non-zero-emission cars • Vehicle costs, including non-recoverable VAT (financing, maintenance, tyres, insurance, etc.) • Zero-emission cars: 100% tax-deductible • Non-zero-emission cars: the deductibility is calculated using a formula

• Energy costs, including non-recoverable VAT (fuel costs, electricity costs)

• Zero-emission cars: electricity costs are 100% tax-deductible • Petrol and diesel cars: fuel costs track the deductibility of the vehicle costs • Plug-in hybrids ordered before 1 July 2023: fuel and electricity costs track the deductibility of the vehicle costs • Plug-in hybrids ordered from 1 July 2023: fuel costs are 50% deductible; electricity costs track the deductibility of the vehicle costs

This formula is used to calculate the tax deduction: 120% - (0.5% x coefficient x CO2 g/km)

The coefficient stands at 1 for diesel, 0.90 for CNG cars ≤ 11hp, and 0.95 for all other drive types.

The minimum and maximum tax deductions are limited. In order to accelerate the transition to an electric fleet, the limits will be adjusted in the coming years:

• For non-zero-emission cars ordered before 1 July 2023, the minimum limit stands at 50% (40% for cars with emissions ≥ 180g/km), while the maximum limit stands at 100% • For non-zero-emission cars ordered between 1 July 2023 and 31 December 2025, the minimum limit will disappear from 2025. Furthermore, the maximum limit will also gradually be reduced from 2025. The maximum limit will stand at 75% in 2025, 50% in 2026 and only 25% in 2027. Non-zero-emission cars ordered from 1 January 2026 will no longer enjoy tax breaks. • Nothing will change for zero-emission cars until the end of 2026. They will retain their tax breaks. The tax deduction for zero-emission cars will only fall from 2027 onwards. The major difference compared to non-zero-emission cars is the 'grandfather clause': the deduction percentage that is valid at the time of the order remains valid for the rest of the term.