Fiscality and mobility? A challenging combination!

Geraldine Simoens   |  

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Geraldine Simoens

Geraldine is part of the Tax & Legal team.

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It is old news to say that the Belgian tax system is becoming increasingly complex, with constant changes obviously contributing to this.

The legislator decided (once again) to examine the taxation of mobility as a result of the momentum from companies trying to make their internal mobility policies “employee-friendly”.

As a result of ostentatious moves regarding mobility within companies and environmental awareness, together with the technological progress that has been made with regard to electric cars, the legislator has practically “reinvented” fiscal mobility. The old regulations are briefly explained below, followed by an explanation of the most important changes.

Old regulations – Until 31 December 2019

The deduction restriction percentage of vehicle costs is in principle linked to CO2 emissions (i.e. NEDC values). Specific additional rules were applied for a number of ‘items’:

  • The fuel costs are limited to 75% deductibility;
  • The reimbursed vehicle costs to employees, drivers or managers: 30% deductible at 75% and 70% according to the CO2 emissions;
  • Reimbursement of vehicle costs to employees: 30% deductible at 75% and 70% according to CO2 emissions;
  • SGA expenses – 17% must be rejected or 40% if the company covers the fuel costs for private use by the employee.

New regulations – From 1 January 2020

From assessment year 2021 (linked to a taxable period that starts no earlier than 1 January 2020) there will be a new calculation formula to determine the deduction restriction:

120 – (0.5 x coefficient* according to fuel type x CO2 emissions),
whereby the following coefficients are applied:
1 = diesel;
0.95 = petrol, LPG, biofuel, electric vehicles, etc.;
0.9 = gas fuelled engines and engines with an engine power below 12 HP.

In addition, the following should be noted:

  • There will be a lower limit of at least 50% deduction and an upper limit of 100% (the 120% limit disappears for electric vehicles).
    Exception: for vehicles emitting more than 200 g of CO2, a deduction restriction of 40% will be applied;
  • The fuel costs will be limited both in personal income tax and in corporate income tax depending on the CO2 deduction restriction;
  • The deduction percentages, and therefore also the fuel costs, must be calculated per vehicle. It is therefore appropriate to link a fuel card to a specific vehicle from now on to avoid administrative hassle;
  • ‘Fake’ hybrid cars (with an energy capacity of less than 0.5 kWh per 100 kilometres) purchased after 1 January 2018: the hybrid nature of the vehicle will not be taken into account. For the calculation of the deduction restriction, a comparable vehicle with the same emission characteristics will always be used as if it were driving entirely on petrol or diesel, for example.

On the other hand, the calculation formula for calculating the benefit in kind has not changed. It should be noted, however, that the most stable calculation over the years is that of electric vehicles as the CO2 emissions are of course not included in the formula.

NEDC versus WLTP

A decision was recently taken to employ a stricter measurement method, the WLTP standard. This is due to the stricter climate policy and results in lower deduction percentages.

It is important to know that the NEDC value may still be used up to and including 31 December 2020. The certificate of conformity will state both values for newly purchased vehicles.

If you have any questions about the above, please do not hesitate to contact us.