Introduction
The shift to electric cars has proven to bring its share of challenges for HR and fleet managers responsible for a Belgian company car fleet, as many new practical considerations arise compared to the context of a “classic” combustion engine car fleet.
But also for tax professionals, this still relatively new concept has raised a number of tax questions to be resolved. For example, one of the unique characteristics of electric cars is the possibility to “refuel” your car at home. Especially in the context of a company provided car, where the employee charges the company car at home, the question arose how these costs, both infrastructural and consumption, could be borne by the employer.
In previous communications, the tax authorities had already clarified:
- Charging stations at home can be paid by the employer without additional tax benefits (subject to certain conditions)
- The electricity costs from charging at home with a charging station owned by the employer, can be reimbursed by the employer to the employee without additional tax due (subject to certain conditions)
However, due to a restrictive interpretation by some parties, there was still some doubt around the reporting obligations for these reimbursements and the tax treatment of reimbursements for electricity costs for charging through a privately owned charging station.
In a recent parliamentary question (NL/FR), the Minister has provided a response to some of these questions.
The principle : administrative tolerance – one single BIK to cover it all
First of all, the Minister of Finance has reiterated the overarching principle of the home charging costs, whether they are infrastructural (f.e. charging stations) or related to electricity consumption. Provided it can be demonstrated that these costs, borne by the employer based on the company’s policy, pertain to the car that is provided by the employer, these costs are presumed to be included in the value of the taxable benefit in kind for the company car.
Furthermore, the Minister has highlighted a few consequences with regards to the reporting obligations of these reimbursements:
- The costs do not need to be reported separately on a salary form or tax return as they are presumed to be included in the already reported benefit in kind.
- The costs follow, for the employer, the same corporate tax treatment as the amount of the benefit in kind reported in hands of the employee and are thus not subject to the tax deduction restrictions on other car-related costs.
The conditions : verified but not owned by the employer
As mentioned in our introduction, there was some confusion in the market due to a strict interpretation of the previous communications of the tax authorities. Indeed, the impression was created that in order for the reimbursement of electricity consumption costs for home charging to be exempt from tax, the charging should be done through a charging station owned by the employer (but installed at the home of the employee).
In the parliamentary question at hand, the Minister has now explicitly clarified that the ownership by the employer is not a specific condition for the exemption.
He reiterates that regardless of the ownership of the charging station, the costs are tax-exempt, if the following conditions are met:
- The employer provides the electric/plug-in hybrid company car;
- The employer’s car policy must provide for reimbursement of electricity charged with the charging station;
- The charging station must have a specific communication system allowing the employer to know the quantity of electricity consumed;
- The reimbursement only concerns the electricity charged for the electric/plug-in hybrid company car provided, i.e. a form of identification system is recommended;
- Reimbursement by the employer must be the actual cost of the electricity.
In practice : a small step forward
It goes without saying that the current communication will be welcomed by many fleet and HR managers that were previously struggling with private charging stations, charging stations from previous employers, end of life charge stations, etc.
However, we recommend employers to remain vigilant when accepting the reimbursement of charging costs through private charging stations. The Minister has been very explicit about the verifiable character of the expense information. It is therefore strongly recommended to do an upfront check of the employee’s private home charging system to substantiate:
- The electric consumptions is communicated based on source information;
- A system is in place to identify that it is the company car that is charged, or to exclude charging of other vehicles.
Especially the latter condition may prove to be technically quite challenging. Likely, a combination of checks and technical solutions will need to provide sufficient certainty to uphold verifiability during a tax audit.
Finally, many will regret that the current communication does not bring any clarification on the calculation method of the reimbursable costs, as the Minister merely continues to refer to the “actual” costs. The question thus remains whether the common practice of referring for the calculation to the average electricity tariff as published by the Belgian energy market regulator CREG will withstand this definition of actual costs.
One can only hope that the Minister of Finance will continue to provide clarity on these topics, taking into consideration the practical implications and not driving employers into the administrative nightmare of figuring out the precise private tariff of each and every concerned employee.
Should you be interested or would like to have more information on this topic, don’t hesitate to reach out to Pieter Nobels or Matthias Vandamme.
