Electrification company car fleet – VAT considerations

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Sofie Van Doninck
12 Jul 2021
Subject Tax alert
Categories Indirect Tax Mobility
Jurisdictions Belgium

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As you likely overheard, according to the draft legislation approved by the Belgian Government, as of 2026 only electric vehicles will be deductible for corporate income taxes (with a cool down period already as of 2023). Moreover, tax incentives are being offered when installing electric charging stations, both at the office or at your employee’s home.

We recently noticed that, both for the companies (“customers”) and the electric charging solution providers (“suppliers”), the VAT considerations related to the electrification of the company car fleet can be very complex and may largely differ depending on the actual circumstances and the precise invoicing set-up envisaged.

Customers

  • Have you already considered that the VAT on electricity costs may be completely non-deductible? That there may be additional VAT leakage compared with fuel costs, if a non-VAT-optimal set-up would be implemented?
  • Have you considered that the level of input VAT deduction for the supply and installation of the electric charging station at your employee’s home, may be entirely different depending on whether or not you charge a compensation to your employee? And that there is VAT due in your companies’ hands on that compensation?
  • Have you considered whether some invoices for electric charging stations should be without VAT charged, while others must be with VAT charged, depending on very precise factual circumstances? And that a non-compliant invoice (with VAT unduly charged) may lead to an entire rejection of your VAT deduction, increased with a proportional penalty of 10% and late payment interest of 9,6% per year calculated on that VAT amount?

Suppliers

  • In light of the above last question, have you considered that in your hands an incorrect VAT treatment may lead to an assessment of VAT (when unduly not charged), increased with proportional penalties up to 20% and late payment interest of 9,6% per year calculated on that VAT amount?
  • Have you considered that in some cases your invoice for the supply and installation of a charging station at home may be subject to the reduced VAT rate of 6% (instead of 21%)?
  • Have you considered that a rejection of input VAT in the hands of your customer (due to incorrect voices), may lead to an adverse commercial impact on your client relationship, due to the rejection of input VAT deduction increased with penalties and late payment interest imposed in the hands of your customer?

Based on our experience, we highly recommend to verify the applicable VAT treatment of the supplies of electric charging solutions and electricity, in order to avoid potential considerable VAT risks and VAT leakage in this area.

Please feel free to reach out to us for any questions. Upon your request, we would be happy to set up a call to discuss the VAT considerations for your set-up and see how we could optimize to avoid any adverse consequences.