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Equal treatment by the NSSO between electric cars and PHEVs in line with the legislator’s initial objective?
For social security purposes - unlike for tax purposes - no benefit in kind is applied for the private use of a company car. As a result, the employer is obliged to pay a monthly lump sum, also called the 'CO2 contribution' or 'solidarity contribution', to the National Social Security Office (NSSO).
This contribution is calculated based on the car's CO2 emissions and fuel type. An indexation percentage is also applied which amounts to 50.46 percent for income year 2023:
- Diesel (including PHEV): ((CO2 g/km x 9 EUR) – 600) / 12 x 1,5046
- Petrol (including PHEV): ((CO2 g/km x 9 EUR) – 768) / 12 x 1,5046
In order to accelerate the greening of the company car fleet - for company cars with combustion engines (including PHEVs) ordered as of July 1st, 2023 - a multiplier is applied to the result of the calculation. This multiplier is initially 2,25, but will rise gradually through the coming years:
|
Year |
Multiplier |
|---|---|
|
July 1st, 2023 |
2,25 |
|
Jan 1st, 2025 |
2,75 |
|
Jan 1st, 2026 |
4 |
|
Jan 1st, 2027 |
5,50 |
Note that electric cars and PHEVs with low CO2 emissions are also not exempt from CO2 contributions. In fact, there is a minimum CO2 contribution, which will increase each year as of January 1st, 2025, and which has to be indexed as well. The increased minimum amount does not apply to company cars purchased, leased, or rented before July 1st, 2023.
|
Year |
Non-indexed amount |
Indexation coefficient |
Indexed amount |
|---|---|---|---|
|
July 1st, 2023 |
20,83 |
1,5046 |
31,34 |
|
Jan 1st, 2025 |
23,41 |
Not yet published |
TBD |
|
Jan 1st, 2026 |
25,99 |
Not yet published |
TBD |
|
Jan 1st, 2027 |
28,57 |
Not yet published |
TBD |
|
Jan 1st, 2028 |
31,15 |
Not yet published |
TBD |
Mid-term NSSO instructions 2023-2
On the 17th of July, the NSSO published instructions with respect to the calculation of the CO2 contribution. First, the NSSO emphasizes that the multiplier should not be applied to the amount of the minimum contribution.
Furthermore, with these instructions, the NSSO now officially confirms that the multiplier has no effect de facto for (combustion) cars that are taxed today on the basis of the minimum CO2 contribution. As a result, all PHEVs ordered as of July 1st, 2023 escape the significant increase originally anticipated.
Let us clarify this with an example. The CO2 contribution for a BMW X1 Hybrid with a CO2 emission of 22 g/km (ordered after July 1st, 2023), should be calculated as follows: ((22 x 9) – 768) / 12 x 1,5046 x 2,25. The calculated amount is -160,80, which is lower than the minimum contribution (i.e. 31,34). As a result, the minimum contribution will apply for the second half of 2023.
Calculations show that PHEVs with emissions of up to 97 g/km (only as from 98 g/km the calculated amount is 32,16, which is higher than the minimum contribution) can enjoy the minimum CO2 contributions in practice. Even in future years, they will still fall under the favorable regime as far as CO2 contributions are concerned. Taking into consideration the 2023 indexation coefficient, this would mean the following:
- 2024: cars with emissions up to 97 g/km will enjoy the minimum contribution (31,34)
- 2025: cars with emissions up to 96 g/km will enjoy the minimum contribution (35,22)
- 2026: cars with emissions up to 93 g/km will enjoy the minimum contribution (39,10)
- 2027: cars with emissions up to 92 g/km will enjoy the minimum contribution (42,99)
It should be noted that the NSSO’s recent interpretation is somewhat contrary to the initial intent of the legislator, in which PHEVs would be disadvantaged compared to electric cars in terms of social security treatment.
Example
As shown in the example below, the C02 contributions for combustion cars will rise significantly over the years and will thus have a substantial impact on the employer cost. For low-emission cars, both electric and PHEV, the impact remains rather limited. It is important to note that, for the time being, the social law treatment for electric cars and PHEVs is similar as both types of cars can enjoy the minimum CO2 contributions.
|
CO2 contributions |
|---|
|
BMW X1 (Petrol) |
BMW X1 (PHEV) |
BMW iX1 (Electric) |
|---|
|
Contribution |
Contribution |
Contribution |
|---|
|
Year |
Multiplier |
Monthly |
Annual |
Monthly |
Annual |
Monthly |
Annual |
|
|---|---|---|---|---|---|---|---|---|
|
2024 |
2,25 |
141,341 |
1.696,06 |
31,34* |
376,09 |
31,34 |
376,09 |
|
|
2025 |
2,75 |
172,752 |
2.072,96 |
35,22 |
|
35,22 |
422,67 |
|
|
2026 |
4,00 |
251,273 |
3.015,22 |
39,10 |
469,25 |
39,10 |
469,25 |
|
|
2027 |
5,50 |
345,494 |
4.145,93 |
42,99 |
515,84 |
42,99 |
515,84 |
|
Sum (4 years) |
10.930,17 |
1.783,85 |
1.783,85 |
|---|
1 = ((141 x 9) – 768) / 12 x 1,5046 x 2,25
2 = ((141 x 9) – 768) / 12 x 1,5046 x 2,75
3 = ((141 x 9) – 768) / 12 x 1,5046 x 4,00
4 = ((141 x 9) – 768) / 12 x 1,5046 x 5,50
* This is the minimum contribution. For the above calculation, the non-indexed minimum contributions for 2024, 2025, 2026 and 2027 have been multiplied by the 2023 indexation coefficient (being 1,5046) since indexation is not yet available for these dates in the future.
Conclusion
In its most recent instructions, the NSSO deviates its interpretation from the legislator's initial objective. It is noteworthy that PHEVs, at least as far as CO2 contributions are concerned, can still enjoy the more advantageous social law treatment for several years to come. This interpretation is beneficial for companies that have ordered PHEVs after July 1st, 2023 as the impact/increase of the CO2 contributions will remain rather limited in the near future, compared to the impact/increase for combustion cars.
Employers should take this into account in view of fleet management and mobility strategies. Current TCO models should be reviewed and updated in order to forecast correct budget plans. Our EY People Advisory Services Reward team has developed a unique and fully complete TCO and TCM tool which includes all mobility related costs, direct and indirect, tax, social and others. Want to learn more, please do not hesitate to contact your PAS contact person.