New calculation module for deductibility car costs as from 2020
14 November 2019
You may recall that the so called “summer agreement” at the end of 2017 made significant changes changes to the corporate income tax regulations. Although voted in one single law, not all measures took immediate effect. Instead the legislator provided for different moments for the various measures to take effect.
Deductibility car costs
From the 2021 assessment year (related to taxable periods starting as from 1 January 2020) the deductibility of car costs will be calculated based on a new formula:
120 – (0.5 x coefficient x number of grams CO2/km)
Under the new regulations, the coefficient for diesel cars is 1.00. For petrol cars and natural gas cars and with less than 12hp, this coefficient is fixed at 0.90.
The maximum deductibility percentage will henceforth be limited to 100%, but with a minimum of 50%, unless the CO2 emissions amount to at least 100 gr/km. In the latter case, the deduction percentage amounts to 40%.
The existing 120% cost deduction for CO2 neutral cars will therefore be abolished as of that moment.
The 75% flat-rate deduction rate for fuel costs will also disappear. Fuel costs will henceforth be determined according to the new deduction percentage applying to the vehicle.
Administrative follow-up becomes more complex
The administrative monitoring of the tax treatment of car expenses, therefore, will become more complex in the future, because the deduction percentage will be calculated per vehicle rather than grouped as is the case today.
We would therefore advise you to take these new rules into account when accounting for car expenses in the future. This will greatly simplify the correct tax treatment in the corporate income tax return.
We will be pleased to provide further assistance or explanation on the new regulations. Please do not hesitate to contact us..