Q&A on the benefit in kind for 2021 and 2022

The government has published the CO2reference values for calculating the benefit in kind in 2021. A few days before this, Parliament had adopted a legislative proposal to cap these reference values from 2022. We explain everything below, including why an electric car will protect you from any unpleasant surprises from 2022...

In 2020, the CO2 reference values were 111 grams for petrol cars (as well as for CNG, LPG, hybrids and plug-in petrol hybrids) and 91 grams for diesel cars (and plug-in diesel hybrids).
For 2021, these reference values are significantly lower, at 102 grams for petrol cars and 84 grams for diesel cars. This is caused by the significant steps taken to green the fleet in 2020 due to the success of electric and (plug-in) hybrid cars. A drop in these reference values also means an increase in the benefit in kind to be paid by the driver.

In 2020 the minimum BIK was €1,360. The minimum BIK will only increase slightly in 2021 and amount to € 1,370. The indexation is therefore 1%.

Which calculation formulas will be used?

Diesel =
List price x [5.5 + ((CO2 - 84) x 0.1)]% x 6/7 x age coefficient of the vehicle

Petrol, full hybrid, "fake" plug-in hybrid, LPG and CNG =
List price x [5.5 + ((CO2 - 102) x 0.1)]% x 6/7 x age coefficient of the vehicle

Electric/hydrogen/”real” plug-in hybrid =
List price x 4% x 6/7 x age coefficient of the vehicle

Which CO2 values will be used?

The government has decided to maintain the guidance previously issued by FPS Finance in 2020. As such, the values to be taken into account for both the benefit in kind as well as the tax deductibility are as follows:

  • NEDC 1.0 CO2 if the vehicle only has an NEDC value

  • WLTP CO2 if the vehicle only has a WLTP value

  • NEDC 2.0 CO2 or WLTP CO2 (free choice) if the vehicle has both an NEDC and a WLTP value

The vehicle's certificate of conformity must be consulted to check whether it has two CO2 emissions (WLTP and NEDC 2.0). For vehicles with two CO2 emissions, this certificate states both the NEDC values for fuel consumption and CO2 emissions (section 49.1) and the WLTP values for fuel consumption and CO2 emissions (section 49.4).

The "weighted combined" CO2 value must be used for electric vehicles while the "combined" CO2 value must be used for vehicles with other engines.

Which list price will be used?

The list price is the price of the vehicle sold as new to a private individual, including any options and VAT paid. Discounts, reductions or free options are not taken into account.

Which age coefficient will be used?

Period elapsed since first registration*
Age coefficient of the vehicle
0 to 12 months
1
13 to 24 months
0,94
25 to 36 months
0,88
37 to 48 months
0,82
49 to 60 months
0,76
More than 60 months
0,70
* Every month started counts as a full month

An example to explain:

  • Let's take the example of a diesel car that costs €30,000 (including VAT and options, but excluding discounts), is registered in January 2021, and emits 99 grams of CO2. This means in 2021 the age coefficient will be 1.

30,000 x [5.5 + ((99 - 84) x 0.1)]% x 6/7 x 1 = €1,800/year vs € 1.620/year in 2020

  • Let's take another example of a petrol car that costs €30,000 (including VAT and options, but excluding discounts), is registered in January 2021, and emits 120 grams of CO2. This means in 2021 the age coefficient will be 1.

30,000 x [5.5 + ((120 - 102) x 0.1)]% x 6/7 x 1 = €1,877.14/year vs € 1.646/year in 2020

 

What will happen from 2022?

Two elements are particularly important in this formula: the car's list price on the one hand and the difference between the car's actual CO2 emissions and the reference CO2 value on the other. The greater this difference, the higher the benefit in kind will be.

With the greening of the fleet, the CO2 reference value would normally fall each year (as is the case in 2021). This is what the legislator had planned in 2012, at least. However, in 2019 and 2020 the reference values rose due to the increase in sales of SUVs and petrol cars, which emit more CO2 than diesel cars. As a result, the benefit in kind fell.
The Chamber of Representatives has ensured that the legislator's original intention has been respected. By capping the CO2 reference values, the benefit in kind will no longer fall.
These ceilings correspond to the values in effect in 2020, i.e. 91 grams for diesel vehicles and 111 grams for petrol vehicles.

Specifically, this means that if the average CO2 values of the cars sold were to rise again, the CO2 reference values valid in 2020 will be taken into account for calculating the benefit in kind from 2022 onwards.

What about electric driving?

By opting for an electric company car, users are protecting themselves against this potential unpleasant surprise from 2022 onwards, while anticipating the legislation announced by the De Croo government for 2026.

Why? Simply because the benefit-in-kind formula for electric (and hydrogen) cars is different. Since the CO2 emissions of these vehicles are zero, only the list price is taken into account:

List price x 4% x 6/7 x age coefficient of the vehicle
Example of an electric car with a list price of €40,000:
40,000 x 4% x 6/7 x 1 = €1,371.43/year

The CO2 averages may rise, but this won't affect the benefit in kind for an electric car in any way.

 

Which expenses will be rejected by the employer?

It is quite common to believe that only the end user of a company car contributes to the private use of the vehicle provided by his employer. That is not the case. The employer also contributes through unauthorised expenses.

• Employees pay for fuel used for private travel themselves:
Rejected expenses: 17%

• The employer contributes to fuel used for private travel:
Rejected expenses: 40%