Since 2012, the benefit in kind for company cars has been calculated by applying a CO2 coefficient to the list value of the vehicle concerned.

How is the list value defined?

The list value is the actual list price of the new car including all optional extras when sold to a private individual plus the VAT actually paid. Any discounts, reductions or refunds that were obtained cannot be deducted from this amount when calculating the benefit obtained.

The CO2 coefficient

The value of the benefit in kind also depends on the CO2 emissions of the vehicle. The tax authorities apply a base percentage of 5.5% in this case. This percentage is applied to 6/7 of the list value.

The theoretical formula is then: 6/7 of the list value x 5.5%

Bonus/penalty

This was the theory in short. However, the government wishes to encourage the use of environmentally friendly cars. Accordingly, fuel-efficient vehicles benefit from a lower base percentage. The tax authorities use a so-called reference emission level for that purpose: 89 gram/kilometre for diesel cars, 107 gram/kilometre for petrol cars. Green cars with lower CO2 emissions are given a reduction of 0.1% on the basic rate for each gram less that they emit. The reverse also applies: cars with higher CO2 emissions are subject to a higher rate. Note: these changes to the base rate are limited. The reduction is limited to a minimum rate of 4%, and the increase is limited to a maximum rate of 18%.

• In practice, the following formula applies to diesel cars:
  [list value x (5.5% + (0.1% x (CO2 - 89)))] x 6/7
• For vehicles that run on petrol, LPG, and natural gas, the formula is:
  [list value x (5.5% + (0.1% x (CO2 - 107)))] x 6/7

The phased reduction eases the pain

A correction coefficient is applied to this list value depending on the age of the vehicle.

In the tax administration's first adjustment to the tax regime, it decided to take account of the vehicle's depreciation as it gets older. This was achieved with the introduction of a phased reduction of 6% per year from first registration.

Specifically, this means that the benefit in kind derived from the vehicle is taxed at:

• 100% from 0 to 12 months
• 94% from 13 to 24 months
• 88% from 25 to 36 months
• 82% from 37 to 48 months
• 76% from 49 to 60 months
• 70% from 61 months, where 70% is the minimum limit.

The value of the benefit in kind is added to the employee's taxable gross salary. If the employee pays a personal contribution for the private use of the car, this contribution is deducted from the value of the benefit in kind.

Benefits in kind and personal income tax

• BMW 318d first registered in 2016 with a list value of €32,550 and CO2 emissions of 106 g. For 2016, the benefit in kind subject to taxation, calculated on the basis of the CO2 emissions and the list price, is €2,008.80 (32,550 x 6/7 x ((106-89) x 0.1) + 5.5%).
   
• BMW X5 3.0d first registered in 2016 with a list value of €61,750 and CO2 emissions of 156 g. For 2016, the benefit in kind subject to taxation, calculated on the basis of the CO2 emissions and the list price, is €6,457.29 (61,750 x 6/7 x ((156-89) x 0.1) + 5.5%).

Tax deductibility of the vehicle for corporation tax

For the BMW 318d in the examples above, the non-deductible amount would increase by €341.50 (2,008.80 x 17%). This leads to an increase of €116.07 in corporation tax. For the BMW X5, the increase would be €1,097.74 (6,457.29 x 17%), which would lead to an increase of €373.12 in corporation tax.

And what about mileage expenses?

An employee who does not have a company car and who claims expenses from the employer for business travel in his or her own car does not have to include these expenses in their personal income tax return, on condition that the employer pays EUR 0.3412 per kilometre (for the period 01/07/2015 - 30/06/2016). If you pay higher mileage expenses, you must justify this to the tax authorities. Otherwise the surplus will be taxed as pay.

Benefits in kind and disallowed expenses

The tax on the company car is divided between the employees and the employers. If a company provides the benefit in kind, it must include 17% of the benefit in the disallowed expenses. The disallowed expenses therefore include: 17% x 6/7 x list price x CO2 percentage.

It's important to realise that the company must always pay tax on the benefits in kind. No deductions may be applied to the amount included in the disallowed expenses. Accordingly, this amount is always the minimum tax base.

This amount included in the disallowed expenses comes on top of the existing deduction restriction for car expenses. However, the value of the benefits in kind may still be deducted from the non-deductible car expenses.

A recently commissioned survey by BNP Paribas Fortis on mobility found that this remains a major challenge for the coming years. The bank is determined to play its part.

A survey among 2,000 people, and representative of the Belgian population, on mobility shows that the switch to electric driving is slowing. Almost 80% of those surveyed still drive a diesel or petrol vehicle, and more than a third of them have no intention of trading in their cars for a more environmentally friendly model any time soon. And yet almost 50% want to be driving electric by 2029. But before that switch, some hurdles first need to be cleared. According to two-thirds of respondents, the bank needs to take a proactive role in the transition to sustainable mobility.

• Only 10% of cars on the streets today are electric, hybrid or run on hydrogen. Users of these vehicles confirm they are very satisfied. Though most have their own charging station, public charging stations are a bottleneck.
• While fighting climate change remains the main argument for switching, changing mobility habits isn’t so easy. The switch to electric is slow, and more incentives are needed, such as new tax measures, and above all, a commitment from the government. Prices also need to come down. It is clear that the practical issues of driving and charging times mean people hesitate to make the switch.
• As a result, enthusiasm about new mobility initiatives is rather muted. Although, especially in big cities, an app that combines mobility options has good chances of success.
• Mobility and work are strongly linked. One in three people spend at least an hour a day travelling to/from work. It turns out that teleworking is a solution for only 50% of the people, and that the other half of the population don’t have the opportunity to work from home.
• More awareness needs to be created around new mobility. Not everyone is familiar with shared cars, bikes and charging stations yet.

Mobility partner

BNP Paribas Fortis is determined to contribute to more sustainable mobility and be a mobility partner for both professional and private customers. We are doing this by informing audiences of all the advantages of an environmentally friendly switch. And also by offering support through financing, insurance and leasing. Our goal is to provide a global response to tomorrow's mobility needs through innovative services.

More and more people are cycling to work. Mobility solutions expert Philippe Kahn explains how and why.

People are changing the way they travel to limit their environmental impact: behaviours are starting to shift, and the use of bicycles is rising, including and especially for travelling to and from work. We spoke to Philippe Kahn, Mobility Solutions Expert at Arval BNP Paribas Group, about these developments. 

Two out of three Belgians use soft mobility, mainly bicycles

According to Profacts’ “Mobility Tomorrow & Beyond” survey, two out of three Belgians have adopted soft mobility. "But the biggest change is the increasing use of bicycles for business travel and commuting. People are also using bicycles more on the school or nursery run, facilitated by the arrival of electric cargo bikes on the market," says Kahn.

A favourable regulatory framework

But what are the reasons for the increased use of bicycles for business travel?  “Let’s first take a look at how the regulatory framework has changed," says Kahn. "In Belgium, the creation of the federal mobility budget has made alternative ways of travelling attractive for all employees. The budget makes it possible to choose a comfortable company bicycle as part of a tax-friendly salary package. Moreover, this mobility budget can even be used to cover housing costs if you work from home more than half the time or if you live within 10 km of your place of work. So instead of having a company car, people can choose to have a combination of an electric bicycle and a contribution to their housing costs. Furthermore, two measures effective from 1 May 2023 should reinforce this trend: the bicycle allowance for commuting is increasing to €0.27 net per km travelled, and all Belgian employees will be entitled to this allowance. In practical terms, this means that those who choose to cycle for these journeys will be substantially rewarded.”

Investment in public infrastructure is paying off

Another important factor in the increased use of bicycles is the development of road infrastructure.

Philippe Kahn: "One factor that can convince people to cycle to work is the certainty of a safe journey. A few years ago, cycling to work in Brussels, for example, could be dangerous. But today, cycling infrastructure is making these journeys increasingly safe, in particular thanks to the cycle motorways on which only bicycles can travel. Infrastructure investments are now also happening in the rest of Belgium, not just Flanders and its major cities. In recent years, Brussels has undergone significant changes, and things are also starting to move in Wallonia.”

Half of all Belgians live within 15 km of their place of work

Distance from the workplace is also crucial in determining how attractive cycling is. "One in two Belgians lives within 15 km of their workplace, a distance that you can easily cycle," adds Kahn. "Along with the Improved infrastructure, this means that cycling to work is a realistic option for many Belgians. And the €0.27 per kilometre allowance will be an added incentive for them to make the change.”

78% of leased company bicycles are electric

To meet the needs of companies and their staff, Arval is now offering bicycle leasing. This full-service lease covers maintenance, breakdown assistance, insurance and repairs, as is traditionally the case for a car. Philippe Kahn points out some very significant trends in this area: "60% e-bikes and 18% speed pedelecs: in total, 78% of our leased company bikes are electric.

High-end bicycles costing several thousand euros, such as electric cargo bikes, are also highly successful, which is probably due to opportunity: the mobility budget or employer “cafeteria plan” benefits packages are making it possible for people to acquire these bikes. But it may also be a consequence of Belgium’s specific tax regulations: the more expensive the bicycle, the more significant the tax incentive. Another interesting observation is that when a  bicycle replaces a car, it’s usually the family’s second car. So we’re not yet seeing any radical replacement of cars by bicycles, but the emergence of the company bicycle is definitely reducing the total number of kilometres travelled by car.”

Digital applications: shifting up a gear

Lastly, Kahn points to another factor that could encourage more people to take up cycling to work. "I think that technology, and in particular digital applications, can make a big difference. We can expect strong growth in the market for apps dedicated to commuting by bike. The business model for on-the-go electric bike rental is already based on a smartphone app. So imagine the success of an application that gives you a safe and bicycle-friendly route for travelling to and from work, and the boost that this could give to this type of travel," concludes Kahn.

As of 2026, a favourable tax scheme will only apply to electric company cars. This is an important step towards – and extra reason to go all out for an emission-free fleet. 1 July 2023 will be a turning point.

The evolution towards more sustainable company cars has now also been laid down by law. Thanks to a number of tax changes, electric company cars or e-cars will be the most interesting choice from now on. The perfect time to start electrifying your fleet already today.

"1 July 2023 is an important turning point for making the transition to electrification," says Philippe Kahn, Mobility Solutions Expert at Arval, the specialist in operational leasing of commercial vehicles. "An employer can deduct significantly less costs for fossil-fuel-powered cars from that date. Hybrid vehicles can still enjoy more favourable tax scheme for a while. Nevertheless, companies should take into account that, as of 1 January 2023, they will only be allowed to deduct 50% of the fuel costs for their hybrid cars."

Electric driving isn’t just more tax-efficient

Electric cars are already 100% tax deductible. "Meanwhile, of the cars leased today, 40% are electric. This upward trend is clear. Until recently, the sensitively higher purchase price of an electric or hybrid car versus that of a comparable car with a combustion engine was a brake. Meanwhile, besides the effect of the shift in taxation, the market mechanism is bringing prices closer together," says Kahn.

But tax deductibility and purchase price aren’t the only factors to consider. In making this choice, it’s actually better to look at the TCO (Total Cost of Ownership). This includes all expected costs. In addition to the tax aspect, consider consumption, maintenance and CO2 contribution. And these four elements are all more favourable for electric cars. If you use the TCO rather than purchase price as a yardstick, you’ll see that a green fleet of e-cars will be the most advantageous choice for your company in the future.

Electric driving gaining momentum

The tax regime for cars running on fossil fuels is gradually changing. Yet the changes in 2023 will remarkably accelerate the move to electric driving. More than ever, it is clearly time for a new mobility.

• Until 30 June 2023
  For company cars ordered before 1 July 2023, the current conditions regarding tax deductibility will continue to apply. For company cars that are leased or rented operationally and for which the beneficial ownership is not transferred, the closing date of the lease or rental contract is considered. The costs of a diesel, petrol or hybrid car remain 50 to 100% deductible, while the costs of electric cars remain 100% deductible.
• Between 1 July 2023 and 31 December 2025
  For non-emission-free vehicles ordered as of 1 July 2023 until 31 December 2025, a transition period will apply, and the deductibility is gradually phased out. From a maximum of 75% in 2025, to 50% in 2026, to 25% in 2027, and ultimately 0% deductibility in 2028. As of 2025 the minimal deductibility of 50% is abolished. The CO₂ contribution for these cars will also increase significantly each year. Emission-free cars will remain 100% deductible.
• As of 1 January 2026 onwards
  Non-emission-free vehicles ordered as of 1 January 2026 will no longer be deductible. Only emission-free vehicles such as electric cars will then be 100% deductible. But this favourable scheme will also be gradually phased out over the next few years, to 95% for vehicles ordered in 2027, to 90% in 2028, to 82.5% in 2029, 75% in 2030 and eventually to 67.5% in 2031.
• Plug-in hybrids (PHEV)
  For plug-in hybrids (PHEVs) ordered as of 1 January 2023, the tax deductibility of petrol and diesel costs will be limited to 50%. Electricity and other costs are not covered by this restriction. This measure is designed to encourage the use of electric motors and PHEV. Otherwise, PHEVs will continue to follow the non-emission-free vehicle rules.

And for your employees?

The status of the company car as an alternative remuneration will remain in place until after 2030. “If you allocate a company car that your employee can also use privately, this benefit will be taxed as a fixed benefit in kind. That depends on the list price, fuel type and the CO2 emissions. Although electric vehicles generally have a higher list price, zero emissions can make up the difference and in many cases, turn out favourably for your employee.”

What about charging?

To help your employees make the most of an electric car, you can have a charging station installed at their home if possible. Both the device and the installation at your employee's home are 100% tax deductible and there is no additional tax benefit for them.

“As a company, you can, under certain conditions, benefit from an increased cost deduction for the installation of charging stations on your company premises. This amounts to 200% for investments made in the period from 1 September 2021 to 31 December 2022 and 150% for depreciations relating to investments made in the period from 1 January 2023 to 31 August 2024. A condition is that the charging station is depreciated linearly over at least five taxable periods and at the earliest as of the fiscal year that is linked to the taxable period during which the charging station is operational and publicly accessible”, Kahn concludes.

Switch to an electric fleet

In addition to favourable tax conditions, there are many other excellent reasons to opt for electric cars today.

• It is an environmentally friendly solution that leads to 17-30% less CO₂ emissions than the emissions from ICE (Internal Combustion Engine) vehicles throughout the entire life cycle of the vehicle.
• A wide range of new models is already on the market today and will only increase in the coming years.
• Most new models already have a driving range of 300 to 600 km.
• Advantageous Total Cost of Ownership (TCO).
• Electric driving is pleasant and causes much less street noise.
• The public charging infrastructure is expanding rapidly.
• Access to low-emission zones and cities that ban diesel and petrol-vehicles.

Nowadays, responsible fleet management is built around sustainability. Don't wait any longer to electrify your fleet and reduce your company’s ecological footprint. Our mobility partner Arval will help you to make your fleet more sustainable and support you in your transition to electric vehicles.

Discover all our solutions or discuss them with your relationship manager.

Lessor: ARVAL Belgium NV/SA Ikaroslaan 99, B-1930 Zaventem - RPR Brussels - VAT BE 0436.781.102.

Sustainability isn't a hype – it's a must. The transition is also in full swing in terms of mobility. With bicycle leasing, you offer your employees a high-quality bicycle package and choose a more sustainable mobility offer. And it's tax efficient.

Cycling to work is popular

Not only our way of working has become hybrid; so too has the way we travel to work. More and more people are seeing the benefits of cycling to work, whether or not electric. An e-bike or speed pedelec is no longer just a gadget. Thanks to these, you can now comfortably cycle longer distances. So, bicycles are certainly part of a sustainable mobility policy. Bicycle leasing allows you to offer your employees a healthy and sporty option that reduces your organisation’s carbon footprint.

How does bicycle leasing work?

Bicycle leasing is much more than just financing bicycles. Maintenance, repairs, breakdown service and insurance are all included in the package. With Bike Lease, our mobility partner Arval offers an operational, full-service solution for 36 months. With over 120 brands and all types of bicycles, the range is extensive: city bikes, sports bikes, e-bikes, speed pedelecs, mountain bikes, folding bikes, etc. Your employees choose the bicycle that suits them best. An annual maintenance budget is provided for maintenance and repair by professionals. Bike Lease also includes indemnity for accidents, theft and vandalism of the bicycle with a fixed excess based on the value of the lease bike. And finally, a 24/7 breakdown service is provided within 45 minutes, anywhere in Belgium.

Good for everyone

Including bicycles in your mobility offer offers both your company and your employees many advantages.

• Tax-efficient

The leasing costs are deductible for your company if your employees use their bikes to commute. By using this bike to commute, they avoid a taxable benefit in kind.

• Healthy

Cycling makes healthier and fitter employees who suffer less from stress. And your company benefits from this as well.

• Affordable

A bicycle is a cheaper alternative or complement to a company car for short to medium-distance trips. You save on fuel, maintenance and parking costs. It also allows you to offer mobility to a wider target group.

• Flexible

Once your employees have chosen a type of bicycle, they decide for themselves when they pedal to work. Through all kinds of weather, when the sun is shining or when there are too many traffic jams and a bicycle is the perfect alternative to a car. They can also enjoy their bikes in their free time.

• Sustainable

A bicycle has of course a low ecological footprint and fits perfectly in a sustainable mobility policy. By offering your employees a bicycle, your company emits less CO₂ and your organisation becomes more socially responsible.

Operational leasing is offered by Arval Belgium SA/NV, with the intervention of BNP Paribas Fortis SA/NV – Montagne du Parc/Warandeberg 3, B-1000 Brussels, Brussels Register of Companies VAT BE0403.199.702.
The information provided here does not constitute an offer. An offer is made only after your file has been accepted and is always subject to Arval Belgium SA/NV's General Terms and Conditions.