Global Employer Services News

Belgium - Belgium updates benefit in kind calculation for company cars

Belgium Minister of Finance Vincent Van Peteghem on 30 January 2024 reached an agreement with the federal government regarding the determination of the reference CO2 emission to mitigate the tax burden on company cars that run on fossil fuels.
Reference CO2-emission and the calculation of the benefit in kind of company cars
When employers provide a company car to their employees, which may be used for both business and private travel, a taxable benefit in kind to the employee must be calculated. Belgium provides a specific formula for this calculation that includes a so-called “CO2 coefficient,” which is determined by comparing the CO2 emissions of the company car with the “reference CO2 emission”. The more the actual CO2 emissions of the company car exceed the reference CO2-emission, the higher the benefit in kind. For more details on the calculation, see Benefit in Kind Company Car - BDO.
Changes in fleet result in increased taxable benefit in kind for company cars
The “reference CO2 emission” is the average of all CO2 emissions of new cars registered during a 12-month period ending on 30 September of the year before the income year; for example, for income year 2024, the period runs from 1 October 2022 to 30 September 2023.

Because the determination of the reference CO2 emission takes into account only the NEDC value of cars, newly registered cars that run on fossil fuel and that only have a (higher) WLTP value from 2021 were not included in the calculation. Together with the fact that many companies switched their fleet to electric vehicles last year, the average CO2 emission of the Belgian fleet has decreased sharply compared to previous years.

As a result, the taxable benefit in kind for fossil fuel company cars increased substantially from January 2024 onwards.

Based on the foregoing, Minister Van Peteghem concluded that the determination of the reference CO2 emission is no longer adequate.
Based on Minister Van Peteghem’s proposal, the government decided to update the determination of the “reference CO2 emission” by taking all cars into account. If a car has an NEDC value, this will be used to determine the “reference CO2 emission.” If this value is not available, then the WLTP value will be used. For electric cars, zero emissions is taken into account.

The following reference CO2 emissions were determined under this new regulation:
  • 78 g/km for vehicles with a petrol, LPG, or natural gas engine; and
  • 65 g/km for vehicles with a diesel engine.
An example may help to clarify the impact of the changes. For income year 2024, a company makes available to its employee a company car (BMW 518dA Touring), that runs on diesel with the following catalogue value and CO2 emission:
  • Catalogue value: EUR 56,582.18 (new car)
  • CO2 emission: 120 g/km
Before the changes to the reference CO2 emission, the annual taxable benefit in kind amounted to EUR 6,450.37. After the changes, the annual taxable benefit in kind will amount to EUR 5,334.89.
What’s next?

Based on the new rules, payroll providers must correct the taxable benefit in kind for company cars for the month of January 2024 on the basis of the new information, if not yet done.

In addition, given that over time the Belgian fleet will become more environmentally sound, and that this will lead to an increase in the taxable benefit in kind for fossil-fueled company cars, it might be a good idea to investigate alternatives.

Should you have any questions, do not hesitate to contact us or your usual BDO contact person.

Melissa Claessens
Nathan Vanacoleyen
BDO in Belgium