Company car tax and social security impact 2021 – 2031

The passed bill for greener company cars is based on three pillars:

  1. The tax and social security impact of cars with CO2 emissions and zero-emission cars
  2. Tax incentives for charging infrastructure
  3. Simplification and expansion of the mobility budget

    By planning for the years ahead now, the government wants to create a clear and stable environment that allows employers and leasing companies to make the necessary adjustments and get on with the necessary actions well in advance.

    The measures are spread over the period 2021 – 2031.  To clarify the timing, we show the measures on a timeline.

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LeasePlan e-Cademy

We organised a webinar on vehicle tax reform on 19 November 2021. Click on the link below to experience the LeasePlan e-Cademy session again. You will also find the questions we received during the webinar including the answers on our FAQ section below this page.  

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Pillar 1: Tax and social security impact of cars with CO2 emissions and zero-emission cars

  1. Period before January 2023

    All cars ordered before 1 January 2023 are subject to the current tax deduction rules.  The current maximum limits (100%) and minimum limits (50% or 40% for vehicles with CO2 emissions of more than 200g/km) are also retained provided that the vehicle does not change ownership.

  2. January 2023

    For plug-in hybrid cars ordered after 1 January 2023, fuel costs will no longer be in line with the car’s tax deductibility. Instead, they will only be 50% tax-deductible.  This government measure aims to prevent plug-in hybrid cars being ordered solely because of the tax advantages without being charged regularly.

  3. July 2023

    a) Tax deduction fade-out scenario for non-zero-emission cars The tax relief for internal combustion engine cars ordered after 1 July 2023 will be gradually reduced.

    • The maximum deduction will be capped and will decrease annually. The capping will start at 75% in 2025. It will be 50% in 2026, 25% in 2027 and finally 0% in 2028.
    • The minimum deduction of 50% (and 40% for cars with emissions above 200g) will disappear from 2025.

      Example: A car with CO2 emissions of 180g/km is currently 50% deductible, but the same car ordered after July 2023 will only be 30% deductible in 2025.

      The graph illustrates the fade-out scenario and its impact on a car's total life cycles.

    b) Higher CO2 solidarity contribution for non-zero-emission cars To bring Belgian social legislation in line with the tax legislation, the CO2 contributions for internal combustion engine cars ordered from 1 July 2023 will also change.

    The CO2 contribution – which is based on a car's CO2 emissions – will increase significantly for non-zero-emission cars in order to dissuade the use of this type of car.    A CO2 contribution is only due if the employee is also allowed to use the vehicle for private purposes.  It only applies to persons with employee status, not the self-employed.

    For cars purchased from 1 July 2023, the calculated CO2 contribution (based on the current formula) will be multiplied by a factor that is to increase annually:

    • 2023: * 2.2
    • 2024: * 2.2
    • 2025: * 2.75
    • 2026: * 4.00
    • 2027: * 5.50

      The graph below shows the effect of these multipliers.  We have calculated the current and future CO2 contribution for a petrol car with a CO2 emission of 159g (WLTP). Based on the current formula and the reference values, the CO2 contribution will increase from €72 per month in 2023 to €396 per month in 2027.  It is clear that the government wants to significantly discourage the use of internal combustion engines.

  4. January 2025

    The legislation aims to encourage a green fleet and also wants to stop the taxable benefit of a company car from rising any further.  This would encourage the private use of company cars even more and possibly lead to more traffic congestion.

    The minimum CO2 contribution will therefore be increased slightly, so that when all company cars are zero-emission, the average CO2 company car contribution will be the same as it is today.

    From 2025, the minimum CO2 contribution will be increased for all types of vehicles (including zero-emission cars) ordered after 1 July 2023.   These minimum amounts still need to be multiplied by the indexation coefficient.  In 2021, the minimum contribution is therefore €20.83 * 1.3222 = €27.54.

  5. January 2026

    This is perhaps the measure that stands out the most. New internal combustion engine cars ordered from 1 January 2026 will no longer qualify for any tax relief.  Only zero-emission car expenses will be deductible from a company's income before taxes. This measure also applies to cars selected from the mobility budget in pillars 1 and 2.  The only exceptions are light commercial vehicles and motorcycles, which will remain 100% tax-deductible regardless of whether they have CO2 emissions or not.   Finally, the commuting allowance of €0.15 per kilometre will only be tax-deductible for zero-emission cars.

  6. January 2027

    From 2027, the tax deduction of zero-emission cars will gradually fall from 100% to 67.5% in 2031.  The grandfather clause is applicable here: the deduction percentage that is valid at the time of the order remains valid for the rest of the term.

    The graph below illustrates the falling tax deduction based on the start date of the car.

     

Pillar 2: Tax incentives for charging infrastructure

The federal government wishes to work with the regional governments to expand the charging infrastructure in Belgium.

Since September 2021, companies that install publicly accessible charging stations can deduct a higher percentage of costs.  The cost deduction depends on the installation period:

  • Installation between 1 September 2021 and 31 December 2022: 200% cost deduction
  • Installation between 1 January 2023 and 31 August 2024: 150% cost deduction

    To be eligible for this incentive, the charging station must be publicly accessible to third parties during and/or after the company's opening hours.  The measure only applies to charging stations installed before September 2024.

Individuals who have a charging station installed at their own expense can enter the costs in their personal income tax return.  The tax relief depends on the installation period: 

  • Installation between 1 September 2021 and 31 December 2022: 45% tax relief
  • Installation between 1 January 2023 and 31 December 2023: 35% tax relief
  • Installation between 1 January 2024 and 31 August 2024: 15% tax relief

To qualify for tax relief, the following conditions must be met:

  • It must be a smart charging station.
  • The charging station must be installed by a professional company.
  • The charging point must be powered by green energy.
  • The maximum amount that can be deducted is €1,500.
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Pillar 3: Simplification and expansion of the mobility budget

Additional mobility options have been added to pillar 2 (soft mobility) of the mobility budget from September 2021:

  • Soft mobility financing costs (such as a bicycle loan), parking expenses and safety equipment
  • Electric scooter
  • Public transport season tickets for family members
  • Parking expenses in combination with public transport
  • Bonus for pedestrians
  • Housing costs:
  • Rental costs and interest charges are complemented by capital repayments (new)
  • The commute radius has been extended from 5 to 10 kilometres

    The 36-month waiting period no longer applies. It is therefore no longer necessary to have had a company car or to have been entitled to a company car for a certain period.  As soon as the entitlement to a company car arises, the mobility budget can be chosen.

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