Company car tax and social security impact 2021 – 2031

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

  • 1.
  • 2.
  • 3.

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.

To bring you fully up to speed on everything that is about to change, we created a white paper and an infographic. That way, you will find all the information you need, conveniently bundled together!

LeasePlan e-Cademy

We have a webinar on vehicle tax reform as well. 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.

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 were subject to the tax deduction rules then applicable. 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 are no longer in line with the car’s tax deductibility. Instead, they are now only 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.

    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) Multiplier applicable to the calculated CO2 contribution of non-emission vehicles 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.

    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:

    If the calculated CO2 contribution after applying the multiplier is less than the minimum contribution, the minimum contribution applies.

    Example: A petrol plug-in hybrid has an emission of 45 g/km. The calculated contribution for a vehicle ordered from 1/07/2023 then becomes: (45x9-768)/12x1.5046x2.25= € -102.41 Calculated CO2 contribution is less than €31.34 => minimum of €31 .34 applies

    The measure also applies to cars that are rented out for short periods. Short-term car rental contracts signed on or after 1 July 2023 are subject to the CO₂ contribution increase.

    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.

    The graph below shows the effect of these multipliers. We have calculated the current and future CO₂ contribution for a C segment petrol car with CO₂ emissions of 130g/km (WLTP). Based on the current formula and indexation coefficient, the monthly CO₂ contribution will increase from €50.40 in the period before July 2023 to €277.20 in 2027. Converted to annual figures, this represents a cost of €3,326.

  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:

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:

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

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:

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.

Frequently asked questions

Do the announced tax measures also apply to existing contracts? The new tax measures apply only to orders whose lease agreement was signed as of July 1, 2023.Which date is used to determine whether a car is subject to the new tax measures or not: the order date or the date of registration? In case of leasing, the date on which the lease agreement was signed is decisive.  In the case of own purchase, the date on which the dealer's order form was signed is decisive.  Neither in the case of leasing nor in the case of own purchase, the registration datmu plays a role.Suppose I order a petrol car in May 2023 and I am still driving it in January 2026. Will the tax deduction for this car continue to apply or not? Tax deductions will be phased out for cars purchased or ordered from 1 July 2023, and will disappear completely for cars purchased or ordered from 1 January 2026. Nothing will change for the petrol car in the example above. The current tax deduction rules will continue to be followed.  In this example, there are no changes in terms of CO2 contributions either.Suppose I order a diesel car on a four-year lease on 1 August 2023. What will happen from 1 January 2026? As the car is purchased after 1 July 2023, the tax deduction percentage will decrease gradually year after year from 2025.  In 2023 and 2024, the tax deduction percentage will be the same as today. In 2025, it will fall to 75% and in 2026 it will be 50%. The CO2 contribution will be multiplied by a certain factor from 2023.What will change for plug-in hybrid cars from 2023? Tax deduction: For plug-in hybrid cars ordered from 1 January 2023, the deductible costs for petrol or diesel will be limited to 50%. Plug-in hybrid cars ordered from 1 July 2023 will also fall under the phase-out scenario for non-zero-emission cars with the tax deduction percentage gradually falling from 100% to 0% in 2028. CO2 contribution: for most plug-in hybrid cars, the calculated CO2 contribution after applying the multiplier is lower than the minimum contribution, consequently the minimum contribution applies.hat about the difference between "genuine" and "fake" plug-in hybrids? The assessment of whether a plug-in hybrid is regarded as "genuine" or "fake" and the resulting taxes remains unchanged.   All plug-in hybrids purchased from 1 January 2018 have to meet two criteria to be considered a "genuine" plug-in hybrid: - CO2 emissions ≤ 50g/km - Battery capacity ≥ 0.5kWh per 100kg car weight A "fake" plug-in hybrid has tax deduction consequences.  The formula is the same, but the CO2 emissions stated on the car's certificate of conformity must be replaced by the CO2 emissions of the equivalent internal combustion engine car.   A list of equivalent cars is published on the website of the Federal Public Service for Finance. If no equivalent car exists, the CO2 emissions must be multiplied by a factor of 2.5.  This arrangement applies to the tax deduction rate and to the benefit in kind.Which CO2 values are currently applicable for car taxation? NEDC 2.0 or WLTP? The ministerial agreement no longer refers to an effective date for the WLTP values. The choice between NEDC 2.0 and WLTP will therefore continue to be offered, provided that both values are stated on the certificate of conformity (COC). As the conversion to NEDC 2.0 has not been mandatory since 1 January 2021, we expect car manufacturers to communicate both values less often.What will happen to the benefit in kind? The formula for calculating the benefit in kind (BIK) will not be affected. However, the benefit in kind may be higher due to the higher WLTP value.Which conditions must be met for the company to be entitled to the increased deduction for charging stations? The charging stations must at least be accessible to employees, visitors and other users (such as residents) during or after office hours.Is there any tax relief for private individuals who have a charging station installed? Yes, a private individual who has a charging station installed between September 2021 and September 2024 can benefit from one-off tax relief. A number of conditions are attached to this: the charging station must be installed by an accredited company, it must be possible to read and manage the charging station with smart software, and the private individual must be able to present a 100% green electricity contract. The maximum amount that can be deducted is €1,500.My company is having charging stations installed at employees' homes. Does a higher tax deduction percentage apply for these costs? These costs are not included in the incentive for higher tax deduction. If the charging station is included in the car's lease contract, these costs will be subject to the usual tax deduction rules for electric cars and will be 100% tax-deductible.Are the announced tax measures final? Yes, the bill was passed on 10 November 2021.

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