Maximum reference CO2-emmission as of income year 2021.
Benefit in kind company car: short recap
When an employer provides a company car to an employee, and this car is used for private purposes by the employee, a taxabale benefit in kind arises. The taxable benefit is computed by multiplying the CO2-coefficient with 6/7 of the catalogue value of the car. Subsequently this amount is decreased in accordance with the age of the car.
The so called CO2-coefficient is thus one of the central elements in the calculation of this benefit in kind and consists of a basic percentage of 5,5% that needs to be increased or decreased depending on the difference between the CO2-emmission of the company car and the reference CO2-emmission.
Scope of the new legislation
The reference CO2-emmission is determined on a yearly basis, depends on the fuel type of the car (diesel engine versus petrol, LPG- or natural gas engine) and is based on the average CO2-emmission of newly subscribed company cars during a reference period of twelve months which ends on September 30 of the year prior to the concerned income year. As a result, if the Belgian vehicle fleet becomes less CO2 pollutant during this reference period, the applicable reference CO2-emission will decrease accordingly. Hence, this will result in an increase of the taxable benefit in kind for the private use of a company car.
However, the opposite is also applicable. The Belgian authorities noticed that, the average CO2-emmission of newly subscribed cars increased during 2019 en 2020. Subsequently, the already contested benefit in kind for the private use of a company car decreased accordingly, contrary to the purpose of the introduction of the reference CO2-emmission in Belgian tax law.
To avoid a further decrease of the taxable benefit in kind, the Belgian parliament recently adopted a new law proposition. As of January 1st, 2021, the reference CO2-emmission cannot be higher than the reference CO2-emmission of the previous income year. Therefore, the reference CO2-emmission of income year 2020 will be considered as the maximum reference CO2-emmission, regardless of the effective reference CO2-emmission/average CO2-emmission. The maximum reference CO2-emmission values as from January 1st, 2021 are thus the following:
- Petrol, LPG- or natural gas engine: 111g/km
- Diesel engine: 91 g/km
If the reference will decrease in the future, the absolute maximum will decrease as well.
Consequences of the new legislation
First of all, it needs to be highlighted that the legislation will not have any impact on the calculation of the taxable benefit in kind for income year 2020. The new legislation will only enter into force as of January 1st, 2021.
However, there will certainly be an impact of the new legislation for future income years due to the electrification of the automotive industry. According to the automotive sector, this evolution will result in a serious decrease of the reference CO2-emmission for income year 2021. At this moment, the sector expects the following reference CO2-emmission values:
- Petrol, LPG- or natural gas engine: 102 g/km
- Diesel engine : 84 g/km
These values are decreased compared to income year 2020 and will therefore be applicable as of 2021. If the average CO2-emission in the market would have increased, the values would have remained equal to income year 2020.
Example
As shown in the example below, the taxable benefit in kind for the private use of a company car will therefore increase in 2021.