Zero taxes for EVs ending story in Flanders by 2025-2026?

If anyone hoped the zero tax policy for EVs the Flemish government is offering to lure more people into electric driving was a never-ending story, it is time to wake up. Around the negotiating table for the next government, all parties – N-VA, Vooruit, and CD&V – agree that the ‘zero tariff’ will no longer be tenable as the growing fleet of electric cars widens, putting pressure on the budget.

According to the newspaper Het Laatste Nieuws, which could glance through the negotiators’ memorandum, they’re considering letting EV drivers pay road tax incrementally, starting by 25%, for instance, from 2025 to 2026. That would apply to company, lease, and private cars as well. The 5,000 premium for private EV purchases disappears in 2025, as expected.

Not written into stone yet

Nothing is written into stone yet, as the memorandum is only a base for further negotiations, but what it boils down to is getting clear. Belgium has two kinds of car taxes: a once-only registration tax and a yearly road tax, which are regional matters and differ in Flanders, Brussels, and Wallonia. Today, zero-emission cars like EVs and cars on hydrogen are completely exempted in Flanders.

The registration tax punishes environmentally unfriendly cars and can range from €54,75 to €13.694,25. It brings in around €300 million yearly for the Flemish Region. The road tax, due yearly, is calculated according to CO2-emission, Euro norm, and fuel type and typically ranges from €76 to €2,347. Muscle cars with engines above 4.2 liters pay an extra €27,92 per horsepower exceeding 20 fiscal hp. This tax brings in 1,3 billion euros yearly.

Walloon tax reform

In Wallonia, the regional government pushed through a tax reform in 2023, taxing cars at registration not only based on their engine size and CO2 emissions but also their weight, which affects electric vehicles. All is multiplied by a coefficient, which is higher for diesel and petrol cars (1,0) and lower for electric (up to 0,26) and PHEVs (0,8). It is to be introduced on January 1^st, 2025,

Here, registration taxes can range from 50 to 9,000 euros, and the Tesla Model 3, for instance, will see this tax increase from 60 to 1,400 euros. EV drivers pay a €97 road tax yearly, independent of the electric car’s model.

EV sales are still booming

Meanwhile, the sales of electric vehicles are still booming, particularly in Flanders, where they increased tenfold from 13,755 in 2019 to 136,569 in 2023, according to figures from the Flemish government. In 2023, one in five newly registered cars was electric.

However, more than 67% of new cars were company cars, and here, a federal 100% deductible tax benefit that applies to the whole country is luring, at least until 2026, to be decreased incrementally later to 67,5% in 2031.

The new Flemish government will continue to stimulate sales of EVs for the time being but must also deal with the growing budget gap. EVs, for instance, have already caused a €40 million hole in registration tax revenue in the last five years.

Electric cars also use road infrastructure, which needs lots of money for maintenance, so nobody doubts that taxes on EVs will come sooner or later. That horizon is now 2025 or 2026, starting probably with a small road tax increasing yearly, but the negotiator’s memorandum shows no exact figures or terms yet. To be continued, without a doubt.