The reimbursement of electricity costs at home. New guidelines and principles?

The amount of reimbursement of electricity charged at home heated the discussions for a couple of months. Reimbursements at the actual value or is a lump sum (CREG) possible? Now the Minister of Finance provides clarity in a Circular letter 2024/C/77 of December 5, 2024.
 

Recap of the general rules

The Circular letter bundles all the previous discussions on the reimbursement of electricity (Parliamentary Questions) and brings them together in one document.

Firstly, the Circular letter makes a distinction based on the way the electricity is provided to the employees:

1. Electricity is paid directly by the employer (e.g. charging pass)
2. Electricity is paid by the employee and reimbursed afterwards by the employer
    

Electricity is paid directly by the employer

In case the employer pays directly to the energy provider for the electricity of the electrical company car via a charging pass, charging for free at the office, installing an extra electricity meter at the premises of the employee, the cost for this electricity will be considered as a benefit in kind which is part of the benefit in kind of the company car as such. So, no additional benefit in kind should be calculated for this electricity cost. This principle might be subject to change in view of the so-called tax and budget reforms.
 

Electricity is paid by the employee and reimbursed afterwards by the employer

More complex is the second situation where the employee pays for the electricity and asks for a reimbursement of the costs afterwards. This reimbursement should be considered as a separate benefit (reimbursement) and is therefore not included in the benefit in kind for the personal use of the company car.

The Minister of Finance reconfirms the conditions in which case the reimbursement can still be considered as a tax-free allowance:

• The employer ensures that a home charger or an electric charging station is installed at the employee’s home.
• The home charger or charging station has a specific communication system that notifies the employer how much electricity is being consumed.
• The reimbursement of the electricity charged with the home charger is included in the companies’ mobility policy.

When the conditions are not fulfilled, the treatment of the reimbursement for the charged electricity at home will depend on the type of travel.

What is new?

General

In principle the reimbursement should be done on the actual value. However, the Circular letter provides a simplification to the administrative burden of the proof of the actual cost of electricity. Therefore, it is (as an exception on the general rules) possible to use a lump-sum amount per KwH which should reflect the actual cost of the electricity.

In order to avoid any discussions, the Circular letter also contains a formula to calculate the lump-sum “CREG” amount which will be applicable for all employees depending on the place of living.
 

Calculation of the amount

The maximum fixed amount per kWh is determined per quarter and per region (Flanders, Brussels, Waloon). This amount is established as follows.

First the fixed amount based on the average per month will be determined (the average all-in commercial electricity price in the retail market for residential customers with a household with a digital meter, an electric vehicle, a consumption of 8,000 kWh/year, and an average monthly peak of 7.36 kW, as published by the CREG in its dashboard on its website for that particular month). The all-in price also includes the following components: the price for energy, network costs (transmission/transport and distribution), taxes and surcharges, and VAT.

Secondly the fixed amount for the quarter will be calculated as follows:

Based on these calculations the following maximum amounts are determined for the first quarter of 2025 (the amounts will be updated every quarter via an addendum to the Circular letter):

Q1 2025 maximum amounts:

Of course, an employer can always decide to reimburse on a lower amount.

As the abovementioned calculation is an exception to the general rules, the Minister of Finance emphasizes that this administrative tolerance will be limited in time. For now, it will be applicable till December 31, 2025, after which an evaluation will be performed.

Solar panels

The circular letter is also applicable in case of solar panels and home batteries, given reading of the text. No specific exclusion is foreseen.

What with the past?

The administration will assess the reimbursements of electricity costs related to the period before January 1, 2025, with a certain leniency when the reimbursements have been carried out in good faith using the published CREG dashboards.

Transition of ownership charging station

Finally, the Circular letter also provides some insights in the transfer of the ownership of a charging station at the end of the provision.

If at the end of the provision of a charging station, the ownership of that charging station is transferred to the employee free of charge, this transfer of ownership generally results in the taxation of a benefit in kind for the employee at its actual value. However, the residual value of the charging station for the employee at the time of the transfer of ownership is a matter of fact and must therefore be assessed on a case-by-case basis.

The above principles and guidelines provide more insight on the current view with respect to the reimbursement of electricity for EV and hybrid cars. These new guidelines will impact your current compensation and benefits policy as well as practical and administrative handling, including payroll administration, reporting obligations and administrative burden.

If you have any questions or want to discuss the impact of the above on your mobility policy, please feel free to reach out to your regular EY contact.