It has already been a year since the federal government published the law of November 25, 2021 on the "Fiscal and Social Greening of Mobility. In this article, we once again explain the most important changes, so that you immediately know what to take into account when choosing a new company car.
The current tax game rules for company cars
Before discussing the tax rules for company cars, it is important to clarify what is meant by company cars. The term "company cars" includes passenger cars, dual use cars and minibuses, including "false" light trucks (light trucks that do not meet the tax definition of light trucks). Today, the deduction rate for a commercial vehicle is determined using the formula below where the CO2-emissions and the engine type of the car has the greatest impact on the outcome of the formula:
120% - (0.5% x fuel coefficient* x number of grams of CO₂/km)
- Diesel: 1.00
- Gasoline / gasoline hybrid / diesel hybrid: 0.95
- Natural gas: 0.90
The higher the car's emissions, the lower the tax deduction percentage. However, the deduction percentage can never be lower than 40% and never higher than 100%.
The bulk of gasoline and diesel cars today have a tax deduction rate between 50% and 65%. The costs associated with electric cars are fully deductible for the simple reason that these cars have no emissions and thus the formula results in a deductible of 100%.
Hybrid cars that combine a fuel engine with an electric motor are also almost always 100% deductible. However, this only applies to hybrid cars that have a battery with an energy capacity of at least 0.5 kWh per 100 kilograms of car weight and no more than 50 grams of CO2 emissions per kilometer. Cars that do not meet these conditions are also called "false hybrids.
These "fake hybrids" are tax-equivalent to fuel-only cars, resulting in lower deductibles.
Decline in tax deductibility starting in 2023
The greening of car taxation will take effect in stages over the next few years. The first change relates to the deductibility of fuel costs for hybrid cars, and will take effect on Jan. 1, 2023.
Cars with only an internal combustion engine
For cars that only have a combustion engine and are ordered from 01/07/2023, the tax deduction percentage is systematically reduced to zero during the car's useful life. This reduction of the tax deductibility will take effect from fiscal year 2026 (fiscal year started on 01/01/2025 at the earliest).
The maximum deduction rate for these cars is phased out as follows:
- AJ 2026: 75%;
- AJ 2027: 50%;
- AJ 2028: 25%;
- AJ 2029: 0%.
Cars ordered before 01/01/2023
For "real" hybrid cars for which the order form or rental/lease contract is signed before 01/01/2023, the deductibility of all car expenses (including fuel) is calculated based on the formula already mentioned. This means that for these cars fuel costs (fossil fuels & electricity) are also deductible up to a maximum of 100%. This deduction arrangement is maintained throughout the car's useful life.
Wagons ordered between 01/01/2023 and 01/07/2023
Also, for hybrid cars ordered between 01/01/2023 and 01/07/2023, the deductibility is still calculated using the previously mentioned formula. However, for these cars, the fossil fuel deductibility is limited to a maximum of 50%. This deduction arrangement is maintained throughout the car's useful life.
Cars ordered from 01/07/2023
For cars ordered from 01/07/2023, the tax deduction of a maximum of 100% (50% on fossil fuels) will only apply for tax years 2024 and 2025. From tax year 2026 onwards, the deduction percentage will then gradually drop year by year before finally being completely extinguished in tax year 2029 (fiscal year from 01/01/2028 onwards).
Cars with only an electric motor
Fully electric cars purchased before 01/01/2027 will retain their 100% deductibility throughout their useful life. From 2027, the deduction percentage will be phased out year by year, looking at the deduction percentage applicable in the year of purchase. This percentage will then be maintained throughout its useful life.
Thus, electric cars purchased between 01/01/2027 and 31/12/2027 will be subject to the deduction rate of 95% throughout their useful life. The tax deductibility will be phased out year by year to eventually arrive at a fixed deduction rate of 67.5% as of Jan. 1, 2031.
The phase-out of the deduction rate is as follows:
|Date of purchase, lease or rental||Tax deductions|
|Before 01/01/2027||100%, full duration|
|In 2027||95%, full duration|
|In 2028||90%, full duration|
|In 2029||82.5%, full duration|
|In 2030||75%, full duration|
|In 2031||67.5%, full duration|
What about the charging station?
Whoever says electric car, immediately says charging station. To stimulate the growth of (smart) charging stations, the government provides tax incentives for both individuals and companies.
For individuals, the government provides a tax rebate for the investment in a smart charging station installed near the home. Those who invested in a charging station between 01/09/2021 and 31/12/2022 could count on a tax rebate of 45%. In 2023, the rate will be 30% and in 2024 15%. The tax reduction amounts to a maximum of €1,750 per charging station. However, this requires that the car be charged with green electricity. The tax reduction can only be applied in the taxable period when the charging station is inspected and ready for use.
Companies can also count on additional support if they invest in charging stations, it must be publicly accessible smart charging stations. For public charging infrastructure put into service between 01/09/2021 and 31/03/2023, companies can enjoy an increased cost deduction of 200%. For public charging infrastructure brought into use between 31/03/2023 and 31/08/2024, the increased cost deduction of 150% applies.
Wondering what tax advantages you can enjoy when purchasing charging infrastructure? Then read our post here where we offer you insight into the various tax rules: Car tax summary table
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