After months of tense negotiations with the European Commission, the Belgian federal government has decided to drastically limit its planned extension of tax deductions for plug-in hybrid vehicles (PHEVs).
What was once pitched as a broad incentive to support businesses transitioning away from older combustion engine cars will now apply only to self-employed individuals. Companies and their employees are excluded from the fiscal sweetener.
Finance Minister Jan Jambon (N-VA) confirmed the revised ruling on Friday, describing it as a necessary compromise to safeguard €282 million in EU recovery funds and to keep Belgium’s broader climate pledges intact.
“The new fiscal regime for hybrid vehicles finally gets the green light after talks with Europe,” Jambon said in a statement. “This keeps fleet electrification affordable and achievable for everyone — at least for the self-employed — while bringing much-needed certainty for the automotive market.”
BMW M5 paid by the government
The revised scope means that only natural persons with a valid VAT number, subject to personal income tax, will benefit from the extended deductibility.
Vehicles purchased or leased through a company structure will remain under the existing phase-out schedule, which was shaped by the former Finance Minister Vincent Van Peteghem. Companies will see tax deductibility for PHEVs taper off, from 75% in 2025 to 50% in 2026, 25% in 2027, and disappear entirely by 2028.
For the self-employed, plug-in hybrids that emit less than 50 g CO₂/km are eligible for 100% deductibility until the point of ownership change. They can order a BMW M5 (39 g) under the tax break. Even their expenses for gasoline enjoy a 50% deduction until the end of 2027, the date after which the measure disappears.
The new rules also form an extension for the deductibility of previously purchased PHEVs. This leads to a rather strange hiccup, as those cars (Euro 6e) dating from the period between July 1st and December 31st, 2024, will see their deductibility rise from 75% in 2025 to 100% in 2026. Also note that as the stricter homologation rules (Euro 6e bis) go into effect as of 2026, the bar for ‘fake hybrids’ will be raised from 50 g/km to 75 g/km.
Red flag
The government’s initial plan, included in its coalition agreement, had promised a more generous approach. A deal reached around Easter would have extended near full deductibility for compliant plug-ins through 2026 and beyond, mirroring the incentives for fully electric vehicles.
However, Europe raised the red flag, warning that this would clash with Belgium’s binding commitments under the National Recovery and Resilience Plan (NRRP). This ties financial support to measurable progress on emissions cuts.
Industry watchers and lobby groups, such as EV Belgium, had been quick to highlight the risks. Philippe Vangeel, director of EV Belgium, described the proposed loophole as a credibility blow for Belgium’s green transition. “Policies like this create doubt, delay, and distrust in the market,” Vangeel said.
“Everyone knows real-world plug-in emissions can be up to 3.5 times higher than test figures.” He pointed to reports from the European Court of Auditors showing that many plug-in drivers rarely charge their vehicles, rendering them inefficient compared to gasoline or diesel cars, as they carry around heavy batteries that are barely used.
A safer step
According to the NV-A, the new carve-out for self-employed drivers must reflect the reality that not all independent workers are ready to switch entirely to battery-electric vehicles. For many, a plug-in hybrid still feels like a safer step toward zero-emission mobility.
However, in light of the latest figures, a relaxation of tax rules for PHEVs can only be regarded as a step back. Today, around 70-80% of new company car orders are electric, according to a recent survey by Acerta.
The HR expert noted that the average CO₂ output of these vehicles has fallen by a third in just two years. This is related directly to the strong incentives from the previous government.
‘Complete rubbish’
Lies Eeckman, managing director of Polestar – a car brand that abandoned PHEVs completely three years ago – called the reasoning of self-employed people struggling to switch to full electric “complete rubbish” on the VRT. She also said that the ruling is like taking three steps back.
FEBIAC, Belgium’s automotive federation, noted in a memo to members that the rule change still aligns with the core policy goal from the government: nudging over 380,000 older gasoline and diesel vans and company cars off the road.
Still, uncertainty lingers. The final texts must pass through Parliament, and the detailed implementation timeline remains under wraps. Whether loopholes like these serve their cause will remain the center of debate.
