The company car system in Belgium is a unique phenomenon. And although the system is popular with users, it also attracts significant criticism, partly because it costs 4 billion euros a year.

Brussels Groen leader and Brussels Minister of Mobility Elke Van den Brandt wants this tax money used to fund train passes costing €12 per year. Van den Brandt calls company cars a privilege for a limited group and the system one of the most unjust and incomprehensible tax constructions in Belgium. And, like the passenger organization TreinTramBus, she advocated phasing out the system and shifting the tax burden, rather than, for example, cutting public transport.

Phasing out the company car system would free up around 4 billion euros on public funds annually, Groen predicts, based on recent figures from the Planning Bureau. That amount would enable structural choices, such as making train travel significantly cheaper, the party argues.

Van den Brandt immediately proposes using that money to subsidize public railway NMBS/SNCB season tickets at €12 per year, or €1 per month.

LEZ becomes LAZ, a low-ambition zone

Theoretically, the exercise makes sense, Groen argues. Currently, NMBS/SNCB generates around 1 billion euros in ticket revenue. By making annual passes widely available at €12, passenger numbers will increase, thereby largely offsetting the income loss.

The remaining 3 billion euros could then be invested in expanding capacity and improving quality: more trains, higher frequency, and extra comfort, such as Wi-Fi and air conditioning.

Van den Brandt and Groen refer to the Brussels public transport company, MIVB/STIB, where young people can now buy a season ticket for €12 per year. “This has been widely criticized,” says Van den Brandt, “but it works because more young people are using public transport and are less dependent on cars.”

However, she believes the system is under pressure, referring to Flanders. “There, we are seeing the opposite happening: less ambition, postponement of stricter standards for the low-emission zone (LEZ), and scrapped investments, such as the express tram along the A12 between Willebroek and Brussels. “That’s how you turn the LEZ into a LAZ, a low-ambition zone, and by scrapping the tram to Willebroek, you push the entire northern edge into traffic jams.

Pros and cons

To put this in context, the company or salary car system in Belgium emerged in the 1980s as a creative solution to the extremely high tax burden on labor. Belgium has one of the highest wage taxes in the world.

Instead of giving extra money or heavily taxed wages, employers provide a car. The tax on this “benefit in kind” is much lower than the tax on a comparable gross wage and, therefore, much cheaper than a wage increase. For employees, it provides a substantial net advantage and income security by bundling mobility costs into a predictable benefit-in-kind.

Younger car fleet

From an environmental perspective, the system has accelerated fleet renewal through short replacement cycles, making Belgium’s car fleet younger, safer, and cleaner than it would otherwise be, while enabling rapid uptake of low-emission and electric vehicles by large fleets.

Crucially, these vehicles then flow into the second-hand market after a few years, extending the greening effect beyond company car users and improving overall vehicle quality and emissions performance across the wider population.

The disadvantage of the system is that the benefit mainly accrues to higher-income earners and white-collar workers, while blue-collar workers and healthcare professionals are often not entitled to a company car.

Mobility budget

Plus, it encourages car use and contributes to traffic congestion (there were more traffic jams in Belgium last year than ever before), because the costs of driving are often borne entirely by the employer.

Since January, larger companies have been forced to offer employees who want to give up their company car a mobility budget without losing any of their net salary.

Instead of the amount that the employer spent annually on your car, you receive a budget that you can spend on public transport, the purchase of a bicycle, or a scooter, for example. You can also use this budget to pay your rent or mortgage interest, and any unused portion at the end of the year is paid out to you in cash.