All about the new calculation of the Benefit in Kind for company cars in 2024
The Belgian company car fleet is electrifying at lightning speed. This is obviously good news, but because of this rapid electrification, drivers of diesel or petrol cars see their Benefit in Kind, and therefore the tax on their company car, rise sharply. However, thanks to a new proposal by Finance Minister Vincent van Peteghem, that impact will be limited. We explain why.
What is the Benefit in Kind? Anyone who drives a company car and is also allowed to use it for private purposes enjoys a Benefit in Kind. The employee pays taxes on this. The amount of this Benefit in Kind is calculated using a formula that takes into account the catalogue value, age and, above all, CO2 emissions of the company car. The more the CO2 emissions differ from the "reference emissions", the higher the Benefit in Kind.
Calculation according to reference emissions Reference emissions are recalculated every year using the average emissions of newly registered cars in the previous year. The result of the calculation is laid down in a royal decree. Since a lot of electric vehicles were registered in 2023, the average emissions of the Belgian company car fleet have fallen sharply. As a result, the difference in CO2 emissions compared to diesel and petrol cars is increasing, and with it the Benefit in Kind. For electric vehicles, the impact is rather limited; because these vehicles do not emit CO2, the tax authorities take into account a flat minimum CO2 base rate of 4%. As a result, electric vehicle drivers pay a relatively low Benefit in Kind or the minimum set Benefit in Kind.
A more balanced calculation To avoid an abrupt increase in the Benefit in Kind for diesel and petrol cars, Finance Minister Vincent Van Peteghem has devised a reformed calculation method for setting the CO2 reference value. Until today, only the outdated NEDC values of cars were taken into account when determining the reference CO2 emissions. Since 2021, however, newly registered fossil cars will only have a WLTP value. Consequently, the number of cars for which a NEDC emission value can be determined has fallen to 39%, incl. electric cars. Electric cars therefore accounted for 44% of the calculation while in reality they represent only 17% of the total number of registrations.
From now on, all cars will be taken into account. For cars where NEDC emissions are known, the NEDC value will be taken into account; for cars where only WLTP emissions are known, the WLTP value will be taken into account; and for electric vehicles, 0 emissions will be taken into account. In this way, the government says it arrives at a correct, representative calculation of reference CO2 emissions.
Applying this new method, the reference values this year are 65 g/km for diesel cars and 78 g/km for petrol cars. They represent a slight decrease compared to the 2023 reference values. The financial impact on the Benefit in Kind for drivers of diesel and petrol cars is therefore limited. The minimum Benefit in Kind was previously set at €1 600.
Want to know more about CO2 contribution, Benefit in Kind and deductibility of company cars? Read all about it here!
