The announced tax reform of Mr. Van Peteghem has the ambition to increase the buying power of employees, to gain more net income out of professional income. The question rises to which extent this will be equally the case for employees driving a company car if the taxation of the private use of fuel cards and charging passes would be reformed for new cars.
As the tax shift should be budget neutral for the Belgian government, different deductions will disappear and other items will become taxable, amongst which the private use of a fuel card and charging pass may become subject to tax and social security charges.
What may change?
Employee
At this moment employees who have a company car pay taxes on a benefit in kind for the private use of the company car. Private use are all kilometers except the professional ones. Commuting from home to work and back is considered private. This benefit in kind is calculated on different parameters of the car (e.g., catalogue value, CO2-emission, etc.) and does not change irrespectively whether the employee also receives a fuel card (or charging pass) or not.
According to the announced tax reform plan, the fuel card/charging pass will become a separate benefit and therefore a separate benefit in kind will be determined for the private use of this fuel card/charging pass.
Based on the general rules, the new benefit in kind will probably be calculated based on the actual value, i.e., the actual price for the fuel or the electricity for the private use, i.e., private driven kilometers.
Employer
If an employer provides a company car, corporate tax will have to be paid on certain costs. One of the elements on which taxes are due is 17% of the value of the benefit in kind. In case the employer also grants a fuel card/charging pass the 17% will be increased to 40%.
If the fuel card/charging pass will become a separate benefit in kind, the 17% principle of the benefit in kind will remain in place. Instead, employer social security will in principle be due on the actual value of this new benefit in kind.
What could be the impact?
Employees with a company car will have to pay taxes and social security on the fuel and electricity of the private use of their car which will result in a substantial lower net salary on a monthly basis.