Government reaches agreement on taxes for petrol and diesel company cars

The federal government reached an agreement on taxation of company vehicles late on Monday night. There will be no increase in the cost of vehicles with combustion engines, prime minister Alexander De Croo’s cabinet announced. 

The government also agreed other measures, including an increase in the annual ceiling on bicycle allowances for employees and not passing on inflation for train season tickets that are 56 per cent reimbursed by employers. 

Company cars are seen as an extra wage benefit on which taxes must be paid. The amount is recalculated every year and depends, among other things, on the car’s CO2 emissions and the average emissions of the entire Belgian fleet: the lower the average emissions, the more a polluting car is taxed. With the rapid electrification of the fleet, taxes would rise sharply for petrol or diesel cars.

"Not every employee, for various reasons, has yet had the chance to choose an electric company car, so it makes sense not to confront them with an artificial tax increase"

Finance minister Vincent Van Peteghem had worked out a solution to mitigate the increase, but the core cabinet failed to agree on it for weeks. As long as Van Peteghem had not filed a new royal decree with CO2 reference values for calculating the benefits, the rates did not change. 

When determining the reference CO2 emissions, electric cars were weighted at 44 per cent in the calculation method, while they account for only 17 per cent of registrations. An agreement has now been reached on a new calculation, to “arrive at a correct, representative calculation of reference CO2 emissions”, Van Peteghem said in a press release.

Bicycle allowance

The agreement has no impact on the greening of Belgium’s company car fleet, he added. “The transition to an emission-free company car fleet continues at pace,” he said at a press conference on Tuesday. “Not every employee, for various reasons, has yet had the chance to choose an electric company car, so it makes sense not to confront them with an artificial tax increase.”

Meanwhile, the ceiling for the bicycle allowance tax exemption will be raised from 2,500 to 3,500 euros, meaning employees who cycle further to work also benefit. In the meat, removals and construction sectors, there will be consultations with social partners to tackle social dumping, and an action plan on combating tax and social fraud was given the green light.



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