The tax deductibility
The new rules will apply to both corporate income tax and personal income tax (with the exception of vehicles purchased by 31.12.2017 at the latest and for which at least 75% is deducted in personal income tax via the transitional regime).
The vehicles targeted are all passenger cars (new or second-hand), dual-purpose cars, minibuses and ‘fake’ light freight trucks purchased from 1 July 2023 onwards. Light freight vehicles and motorbikes are excluded from this scheme until further notice. However, an anti-abuse provision should prevent that everyone suddenly starts driving a light truck.
Fossil-fuel cars purchased between 1 July 2023 and 1 January 2026 fall under a separate transitional measure. The tax deductibility for these cars will gradually decrease. The deductibility will be capped at 75% in 2025, 50% in 2026, 25% in 2027 and 0% in 2018.
For fossil fuel cars bought from 1 January 2026 onwards, there will be a prohibition on tax deductibility.
Fuel costs for hybrid cars
For hybrid cars purchased from 1 July 2023 onwards, the government wants to limit the tax deductibility of fuel costs to 50% to discourage the use of the combustion engine in these cars.
Carbon emission free (electric or hydrogen-powered) cars purchased before 1 January 2027 remain 100% tax deductible for their entire useful life (with the original owner/leaser). This deductibility will gradually decrease from 2027 onwards to 67.5% in 2031 for the entire useful life of the car.
Impact on (home-work) commuting lump sum deduction
Due to the deduction prohibition, as of 1 January 2026 taxpayers can no longer make use of the lump-sum deduction of EUR 0.15/km for commuting. The lump sum deduction can only be applied for:
- An electric vehicle
- Other cars (by way of transition) bought before 1 July 2023 (no impact due to transitional measure) or before 1 January 2026 (with then a limited tax deductibility of 50% in 2026 and 25% in 2027).
Impact on benefit in kind of company cars?
At the moment, nothing changes in the calculation of the benefit in kind for the free private use of the company car on which employees are taxed. The taxpayer will be allowed to continue to use the more favourable NEDC value.
Increased solidarity contributions
For 'classic' cars purchased after 30 June 2023, solidarity contributions will be increased (to x 5.5 from 1/1/2027). For zero-emission cars, the minimum amount will apply, but this will be gradually increased.
Charging stations at home and at work
Private individuals will be able to benefit from a tax reduction if they install a green energy charging station at home that can control the charging time and capacity, between 1 September 2021 and 31 August 2024. The amount for which the tax reduction will be granted is limited to EUR 1,500 (not indexed amount) and will decrease according to the period in which the charging station is purchased. In 2022, the tax reduction will be 45%, in 2023 it will drop to 30% and in 2024 to 15%.
Companies that invest in a publicly accessible charging station between 1 September 2021 and 31 December 2022 can claim an increased cost deduction of 200% or 150% for purchases made between 1 January 2023 and 31 August 2024.
There is also an increased investment deduction for the purchase of carbon-free trucks in 2023 to 2027.
Finally, it has been decided to make the mobility budget more accessible and the number of 'green mobility' expenses in the second pillar for which the mobility budget can be used has been greatly expanded (bicycle loan, scooters, public transport pass for the family, pedestrian premium of 0.24 EUR/km, public transport parking fees, capital repayment if dwelling is located up to 10 km from work, etc.).
On the other hand, the 'environmentally friendly car' that qualifies as an alternative to the current company car will have to be completely emission-free (instead of 'greener' than the current one) as from 2026.
BDO is following up on all further developments closely.
If you have questions about the tax aspects of mobility, please do ot hesitate to contact your regular BDO contact or one of our Global Employer Services experts: