Have you noticed the increase in your benefit in kind for your company car?

People driving combustion company cars and also using them for private purposes might have noticed an increase in the reported amount of their benefit in kind on their January payslip. This is a normal consequence of the changes in legislation with respect to the benefit in kind for company cars that entered into force on January 1, 2021. The CO2 coefficient is one of the central elements in the calculation of this benefit in kind and the difference between the CO2 emission of the company car and the reference CO2 emission determines the increase or decrease of the reported benefit in kind. For more information on the composition and calculation of the benefit in kind, as well as on the scope of the specific legislation, we refer to our previous tax alert.
 

Reference CO2 emission 2022

The reference CO2 emission is determined on a yearly basis, depends on the fuel type of the car (diesel engine versus petrol, LPG- natural gas engine), is based on the average CO2 emission of newly subscribed company cars during a reference period and cannot be higher than the reference CO2 emission of the previous income year. As a result, if the Belgian vehicle fleet becomes less CO2 pollutant during the reference period, the applicable (maximum) reference CO2 emission will decrease accordingly. Hence, this will result in an increase in the taxable benefit in kind for the private use of a company car.

As the Belgian vehicle fleet becomes greener year by year, the (maximum) reference CO2 emission will keep on decreasing. For your information, the (maximum) reference CO2 emission values as of January 1st, 2023 are the following:

• Petrol, LPG- or natural gas engine: 82 g/km (in 2022 91 g/km)
• Diesel engine: 67 g/km (in 2022: 75 g/km)
   

Electrical cars

For electrical cars, the determination of the benefit in kind is different as there is no CO2 emission for these cars. Therefore the CO2 coefficient for electrical cars is fixed at 4%. No formula with actual CO2 emission and reference CO2 emission will be applicable.
 

Example

As shown in the example below, the taxable benefit in kind for the private use of a company car will therefore increase in 2023 compared to 2022 for non-electrical cars. Each time the Belgian vehicle fleet will become greener, the employees with a non-green company car will see an additional increase in their benefit in kind.

The benefit in kind of a BMW X1 (petrol) with a catalogue value of € 43.284 (incl. VAT) and a CO2 of 141 g/km has increased by 34,12 % over a period of 3 years.

The significant increase of the benefit in kind does not only negatively impact the employee, but also the employer. A higher benefit in kind will lead to a higher Total Cost of Ownership (TCO) and higher corporate taxes.

Conclusion

Next to the change in the legislation of car deductibility and the CO2-contribution (law regarding greening of mobility), which has an enormous impact on the costs for the company, the employee also has an impact on the personal taxes by driving a combustion car compared to an electric car.

This makes clear that the government is going forward with the greening of the Belgian company cars by the dissuasive effect of the higher benefit in kind for non-ecological cars. Although there is no obligation to opt for electrical cars at this moment, de facto many employees and employers will make the shift due to the increase in taxes if they don’t.

If you want to know more about the mobility transformation and the way to set up a green mobility policy, don’t hesitate to contact your EY contact.

¹ = 6/7 * 43.284 * (5,5 + (141-111)*0,1)%

² = 6/7 * 43.284 * (5,5 + (141-102)*0,1)%

³ = 6/7 * 43.284 * (5,5 + (141-91)*0,1)%

⁴ = 6/7 * 43.284 * (5,5 + (141-82)*0,1)%

⁵ = 6/7 * 57.950 * 4%