Company cars: decrease of the lump sum benefit in kind will no longer be possible


If we’re talking about company cars, there’s one element that keeps on coming back over the past few years: our fleet needs to become greener.

Now, the Belgian parliament has introduced a Proposal of Law (Doc 55 0904 – 2019/2020)which is (again) looking at the reference CO2-emission which is used to determine the taxable benefit in kind in hands of employees or company directors who are entitled to a company car.

To determine the taxable lump sum benefit in kind, the following formula is  used: List price x (6/7) x factor depending on CO2-emission. That factor starts at 5,5% and increases or decreases by 0,1% per 1 gram CO2/100km the specific car deviates from the reference CO2. This results in a higher taxable benefit in kind when the reference CO2 decreases or in a lower benefit in kind when the reference CO2 increases.

The reference CO2 depends on the average CO2-emissions of cars registered in Belgium during 1 October until 30 September of the year prior to the income year (eg. for income year 2020, the average of the CO2-emissions between 1 october 2018 and 30 September 2019 has been taken). When this was implemented, it was foreseen that this average CO2-emissions would have a decreasing trend over the years, and thus result in an increasing taxable benefit in kind.

However, in 2019 and 2020 we saw an increase of the average CO2-emission for the following reasons :

  • People are buying more SUV’s (with in general higher CO2-emissions)

  • The new WLTP- / NEDC2.0-tests were implemented to determine the CO2-emission of a car, which in general was higher than the old NEDC-value

  • Increasing demand in petrol-cars, which have a higher CO2-emission than diesel-cars

Now, the Belgian parliament wants to put an end to this effect by adjusting the Income Tax Code and implementing a correction whereby the reference CO2-emission can no longer increase as from 2021.

For now it is still draft legislation which is not yet put to a final vote and under discussion in the finance commission. More to follow soon.