A new FAQ has been published by the Belgian Tax Authorities that explains which CO2 emission value has to be used for the calculation of the deductible rate of company car expenses (FAQ, 25 March 2020). Indeed, using the WLTP or even the NEDC 2.0 emission value will lead to an increase of the car related expenses due to the higher tax cost. Also the FAQ on the calculation of the benefit in kind has been updated in this respect.
New formula entered into force as from 1 January
Since the beginning of this year a new formula for the calculation of the deductible rate of company car expenses has been entered into force. This formula depends on the type of fuel and the CO2 emission of the car and will range between 50% and 100% according to the following formula:
- 120% – (0.5% x coefficient x gr CO2/km). The coefficient is 1 for vehicles running on diesel, for CNG the coefficient is 0.90 and for vehicles with a different engine it is 0.95. For highly-polluting cars, the deductibility will be limited to 40%. A highly-polluting car is a car with a CO2 emission of 200 grams or more;
- The deduction for fuel costs is no longer fixed (at 75%) but will also be linked to the CO2 emission of the car;
- Costs in relation to electric cars are only deductible up to 100% instead of 120%.
Due to this new formula, an increase of the car ‘tax’ cost was expected and several companies have taken measures and revised their car policies upfront. However, the following question still rises: which CO2 emission value has to be taken into account?
From NEDC to WLTP
Europe introduced a new ‘dynamic’ test for the calculation of the CO2-emission value of cars or the so called WLTP (Worldwide Harmonised Light Vehicle Test Procedure). As from 1 September 2018 manufacturers were obliged to use the WLTP for ‘new’ registered cars, with the aim to replace the old NEDC (New European Driving Cycle) method. However, manufacturers were still required to calculate a conversion of the WLTP into a value under the NEDC (NEDC 2.0) and this until the end of 2020. As from 1 January 2021 car manufacturers may provide a NEDC.2.0 value, but are no longer required to do this.
This means that from 1 January 2021 there will be vehicles in circulation that:
- Are still homologated according to the old NEDC test and for which the car manufacturer has only mentioned the NEDC value on the COC (Certificate of Conformity/Gelijkvormigheidsattest/Certificat de conformité);
- Are homologated according to the new WLTP test and for which the car manufacturer has mentioned both the new WLTP and NEDC 2;
- Are homologated according to the new WLTP test and for which the car manufacturer had only mentioned the WLTP value.
As the legislation currently stands, the CO2-value that is known within the DIV (Dienst voor Inschrijvingen van Voertuigen/Service Immatriculation Véhicules/Service for the registration of vehicles) should be used for the calculation of the deductible rate. However, there again, no clarification is made on which CO2-value this would be.
Therefore, the following has been decided:
- Cars that only have an NEDC value: the NEDC value has to be used for the calculation of the deductible rate;
- Cars that only have a WLTP value: the WLTP value has to be used;
- Cars that have both a WLTP as well as an NEDC 2.0 value: the taxpayer has the choice.
The aforementioned position applies until new legal provisions are introduced on this. Note that the same rules apply for the calculation of the lump sum benefit in kind of company cars.
If the COC mentions a CO2 emission level (NEDC and / or WLTP), but the registration certificate does not and the DIV does not have any information regarding that CO2 emission content, the deductible tax rate of the professional car costs of the relevant vehicle will be limited to 50% (for companies).
Note that as from 1 July 2019, the registration certificate does no longer mention the CO2 emission value(s). But, one can consult the online platform “‘mijn voertuig, mijn plaat’ or “Ma voiture, ma plaque” of the authorities where the CO2 emission value of the relevant car is to be found.