Van Peteghem willing to lend ICE company cars some tax relief

The Belgian federal government is poised to decide on a proposal from Minister of Finance Vincent Van Peteghem (CD&V) to give owners of company cars on diesel and gasoline some tax relief. The rabbit in van Petegehem’s hat adds the more modern WLTP data to the NEDC measurements, dampening the shock jump.

Owners of company cars on fossil fuels face a sour price adjustment for their benefit-in-kind (BIK), the monthly compensation they must pay for using their car privately. This amount is calculated based on the price and age of the vehicle, but also by mirroring its CO2 emissions with those of the average company car fleet in Belgium.

Hard reality

Behind the complex formula sits a simple logic: when the average CO2 emissions of company cars go down due to EVs booming, it raises the BIK for fossil fuel cars, making them less attractive.

The hard reality for employees is that the theoretical values of their CO2 emissions are fixed at the time of purchase, but they can hardly predict how fast the average will change over time. And, in a year of elections, a sudden tax hike isn’t the best campaign.

With company fleets electrifying at an increasing pace, the gap in 2023 has widened faster than expected. “Disproportionally” is how Van Peteghem dubbed it, so his suggestion is to change the formula by adding the WLTP figures to the NEDC to calculate the annual CO2-reference value.

His justification is that zero-emission cars now account for 44% of the calculation, while their sales account for three times less: 14,4%. WLTP rebalances these proportions more realistically. It also aligns smoother with reality, as car manufacturers are no longer forced to recalculate NEDC values – the so-called 2.0 – on plug-in hybrids, since 2021.

Liberals approve

In exact numbers, Van Peteghem’s new reference emission value for gasoline cars would settle for 77 g/km (instead of 51 g/km) and 63 g/km (instead of 42 g/km) for diesel. The newspaper De Tijd calculated that for a BMW X1 on gasoline, Belgium’s most popular company car, the tax jump would fall back from €38 to €7 per month.

Ironically, Van Peteghem had already suggested the adoption of the WLTP data in the latest proposal on company car decarbonization. Still, it got torpedoed by the liberal party in fear of the current scenario happening then.

The mathematical logic has now reversed the situation. Also, on the bench, the liberals no longer oppose. The left-wing side shows more reluctance and has declared that it wants to assess the budgetary side effects in more detail.

Heading for the status quo?

Electrification is decreasing tax income from company cars at an alarming rate. The Belgian government’s fiscal discount is estimated to be up to 4,5 billion euros annually. Van Peteghem takes a firm stance on the matter.

He has declared that he’s entitled to keep last year’s values afloat without approval. This means company car drivers would be content with a status quo while the treasury faces even less income.

The government is pressured to make a decision. Usually, it approves the reference values in the last months of the year to give the social administration some slack to process the info to its partners and companies.

The significant rise has caused a delay, and the clock is ticking without remorse as the end of the first month of 2024 is nearing. Presumably, the new measures will take effect only as of February.

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