How much does your vehicle really cost?

What is the Total Cost of Ownership?

Total Cost of Ownership (TCO) is a method of calculation that allows the cost of a vehicle to be correctly and fully identified. The TCO looks beyond the lease price alone and takes into account all costs over the entire lifetime of the car and the applicable tax regime.

By comparing the TCO of different cars, you can quickly see which option is the most interesting financially. And since the new tax rules for diesel and petrol cars ordered from 1 July 2023, the differences are sometimes big. For example, electric driving often turns out to be the most advantageous choice. **

What elements are included in the lease price?**

• •

  Depreciation: this is the difference between the net purchase price and the residual value. Once you drive a new car out of the garage, it drops in value. Together with financing costs, depreciation easily makes up 50-60% of the monthly lease price.

• •

  Taxes: the vehicle registration tax for leased cars is based on the vehicle's displacement (expressed in fiscal horsepower) and engine power (in kW). Annual circulation tax is calculated on the basis of fiscal horsepower.

• •

  Insurance: depending on the risks you want to cover, your insurance cost will be higher or lower.

• •

  Maintenance, repairs and tyres: how often your car needs servicing will affect the monthly cost a lot. An electric car, for example, has fewer parts and fluids to change, so the maintenance cost will be lower than for a petrol, diesel or plug-in hybrid car.

What elements should you add to calculate a car's TCO?

• •

  Fuel: petrol, diesel or electricity accounts for 20-25% of your monthly costs. Your consumption depends on your mileage, the load on your car, where you live (e.g. in the city you often have to brake and accelerate again) and the prices for fuel or electricity. Your personal driving style can also influence your consumption.

• •

  VAT: the monthly lease price and the cost of fuel and electricity are subject to 21% VAT. As a company, you can reclaim the VAT that can be linked to the professional use of the car. Here, most companies opt for a flat-rate professional use of 35%. The other 65% of the VAT is not recoverable and must therefore be regarded as an expense.

• •

  Disallowed expenses: if your employee is also allowed to use the car privately, he pays a benefit in kind. But part of this benefit in kind must be recognised by you as an employer as a “disallowed” expense, i.e. a cost added to your company's taxable income. Consequently, you pay a bit of extra corporate tax on this.

• •

  CO2 contribution or solidarity contribution: if your employee can also use his company car privately, as an employer you have to pay a CO2 contribution. This contribution is a lot cheaper for electric cars than for petrol and diesel cars and plug-in hybrids.

• •

  Tax deductibility: costs of company cars are (partly) deductible from your company's taxable income and thus lead to lower corporate tax. The extent to which costs are deductible varies greatly depending on the drive. For example, electric cars are 100% tax deductible, while for petrol and diesel cars the average deduction percentage today is between 50 and 65%.

TCO in an example

We'll make that TCO concrete for a moment. Suppose you want to lease a car for 48 months and are counting on some 30,000 kilometres driven. You are hesitating between a Volvo XC40 (petrol) and a Mercedes EQA (electric). With a list price of €33,017, the XC40 is cheaper to buy than the Mercedes EQA, which carries a price tag of €47,000. Yet the total monthly net TCO for the petrol car comes to €1207, while the EV would only cost you €1035. Why? Because with the Volvo XC40 you also have to factor in higher CO2 emissions. You pay for this in the form of a higher energy cost, a higher solidarity contribution and lower tax deductibility. , The employee along his side pays a benefit in kind that is 2 times higher than the benefit in kind of the electric car

Met andere woorden: elektrisch is vaak goedkoper

Het klopt dat de aankoopprijs van een elektrische wagen makkelijk 30% hoger ligt dan die van een gelijkaardige wagen met een verbrandingsmotor. Maar zoals je in het voorbeeld zag, is elektrisch rijden aan het einde van de rit meestal toch goedkoper: • Je betaalt minder BIV, verkeersbelasting en onderhoudskosten. Lease je bij een maatschappij die gevestigd is in Vlaanderen? Dan betaal je zelfs helemaal geen BIV of verkeersbelasting voor een EV. • De CO2-bijdrage of solidariteitsbijdrage van elektrische wagens blijft ook de komende jaren beperkt tot de minimale bijdrage. Bij alle andere voertuigen zal deze bijdrage jaarlijks toenemen. Vanaf 2027 betaal je 5,5 keer het huidige bedrag voor diesel-, benzine- en hybride wagens. • Alle kosten verbonden aan elektrische wagens die besteld worden vóór 1 januari 2027 zijn 100% fiscaal aftrekbaar. Bij benzine-, diesel- en hybride wagens die besteld werden tussen 1 juli 2023 en 31 december 2025 zullen de minimum- en maximumgrenzen voor de fiscale aftrekbaarheid jaarlijks dalen. Zo is dit type wagens in 2027 nog maximum 25% aftrekbaar. • Laden is goedkoper dan tanken als je thuis laadt of op het werk. (Gebruik je vooral snelladers, dan is dat verschil kleiner.)

Would you like to know what the most advantageous options are for your business? Wee are here for you with solutions tailored to your organisation, today and tomorrow. Discover all our electric models.