A survey of HR service provider Acerta shows that the CO2 emissions of company cars have diminished by one-third in two years. The reason is apparent: since mid-2023, only zero-emission vehicles are 100% tax deductible. This has also resulted in a spectacularly increased presence of EVs in Belgium’s professional car market.
The Acerta study is based on data from 6,700 company cars utilized by client companies of the HR facilitator. While the average CO2 emissions of Belgian company cars decreased by a few percentage points every year, we now see a reduction of one-third in two years: in March 2024, there was a 17% decrease, and by the end of March this year, there was another reduction of almost 20%. In two years, the average CO2 emissions of company cars in Belgium decreased from 100.3 to 66.6 g/km. Over the last ten years, the decrease was 45%.
Tax incentives
This spectacular decrease is the result of a plan by the former Finance Minister in the Vivaldi government, Vincent Van Peteghem, about tax incentives. Only ZEVs were still 100% deductible, resulting in an impressive increase in electric cars and a stark decrease in ICE equivalents powered by petrol or diesel. In the meantime, already 70 to 80% of all newly registered company cars are emission-free.
The latter also means that the average purchase cost of company cars has increased drastically by 47% over the last ten years. Karolien Van Herpe, senior legal consultant and mobility expert at Acerta, explains in the newspaper De Tijd: “A fully electric car is still more expensive to buy than an ICE car. Lower usage costs partly or totally compensate this higher price.”
There is one major problem: the residual value of electric cars has been overestimated by leasing companies in recent years, and the second-hand EV market is slow to start because individual buyers are still reluctant to switch to electric vehicles. The first fully electric company cars were also very large and expensive, resulting in a second-hand price that is still considerable. At the same time, smaller but more performant new EVs are now available at the same price as these 4-year-old behemoths.
The current Arizona government aims to roll back the clock slightly by reinstating tax incentives for plug-in hybrids. Finance Minister Jan Jambon aims to convince smaller company owners or independent entrepreneurs to replace their older company cars with less polluting, electrified ones. Normally, this new ruling is expected to take effect next year. Still, the EU has warned that Belgium could lose approximately €282 million in subsidies if it revises its ‘green plans’ again. The question isn’t resolved yet…
Just recently, the European Commission cited Belgium as an outstanding example of how the impact of CO2 emissions can be reduced in transport by working on tax incentives for the professional sector. It would be rather embarrassing if Belgium were backtracking when it just got (for once) a compliment on its green efforts.
More than one-fourth of EVs
In the meantime, fully electric cars already represent more than 25% of all company cars in belgium and the number is increasing rapidly. BEVs already represent 27.9% of all company cars, compared to 25.2% petrol cars, 23.4% diesels, and 23.2% hybrids (mostly PHEVs).
This number is expected to rise in the years to come, despite potential changes in tax incentives. Many larger companies have already adapted their fleet policies, and they won’t go back to hybrids because the incentive rules are changing again for a couple of years. In the professional car sector, the EV is here to stay. Lease companies simply need to resolve their residual value and resale issues.
