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Belgium: Car taxation changes effective in 2020, challenges for companies with car fleets

Belgium: Car taxation changes effective in 2020

There are changes to the Belgian car taxation regime effective in 2020. These changes may present administrative challenges for companies that have fleets of automobiles.

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Historically, the benefit-in-kind related to a company car has been calculated using a formula that incorporates the catalogue value, CO2 emission, fuel type, and age of each car separately. A part of this benefit-in-kind (either 17% or 40% depending on whether the company is responsible for private fuel expenses or not) must be added to the company’s disallowed expenses.

This treatment will change beginning in 2020. The deduction percentage for all car expenses, including fuel, must be determined for each car separately according to a formula that takes the vehicle’s CO2 emission and fuel type into account. For example, the expenses of a diesel car emitting 120 g of CO2/km are 60% deductible; for a similar car running on petrol, the percentage equals 63%.

Also beginning 2020, there are specific rules regarding what some are referring to as “fake hybrids.” The percentage of deduction for expenses of plug-in hybrids must be determined taking into account the CO2 emission of a corresponding vehicle running exclusively on fossil fuel, if the energy capacity of the battery is less than 0.5 kWh per 100kg weight of the vehicle or the CO2 emission of the vehicle is greater than 50 g/km. If there is no corresponding fossil fuel vehicle, the CO2 emission amount is multiplied by a factor of 2.5. The regime for “fake hybrids” only applies for vehicles purchased, leased or rented as from 1 January 2018.

Read a December 2019 report prepared by the KPMG member firm in Belgium

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