Charging stations: first change in new legislation
July 2022 – The deductibility of business expenses related to vehicles will undergo many changes over the next few years. Cars powered by fossil fuels will cease to be deductible. Electric cars, on the other hand, will remain tax-deductible. To encourage the transition, legislators are using a carrot and stick approach, but an upcoming change in the law will significantly reduce the carrot.
Deduction
The deductibility of company cars (salary cars, but also other passenger cars) will be significantly reformed over the next few years. Fossil-fuel-powered passenger cars will cease to be deductible as of 2026. From 2026 onwards, only 100% electric cars will still be deductible, but this deductibility will slowly decrease over the years to (temporarily?) 67,5% in 2032.
For fossil fuel passenger cars purchased in the period before 2026, a transitional regime is provided that will reduce deductibility to zero from 2028.
For hybrid cars, a slightly different transitional regime is provided, but the deductibility of hybrids purchased in the period after 2026 will also be zero.
These rules do not apply to motorcycles or pickup trucks, as the supply of electric vehicles in these categories is still too limited.
Charging stations
An electric car costs more to buy than a conventional diesel or gasoline vehicle. What's more, for an electric car, you need a charging station. Electric cars can also be recharged from a conventional socket, but the power of such a socket is often too low to recharge the vehicle in an acceptable time (7 to 8 hours per 100 km). A separate installation is therefore recommended.
In order to make the investment affordable for private individuals, the legislator has provided for a tax reduction for the installation of a charging station in the same law by which he abolished the deduction for professional expenses.
For charging stations used in a professional context (charging stations made available to staff, customers or third parties), this law provides for an increased deduction.
Individuals (owners or tenants) who install a charging station between September 1, 2021 and August 31, 2024 benefit from a tax reduction. If the charging station is installed between September 1, 2021 and December 31, 2022, the tax reduction is 45%. If the charging station is installed between January 1, 2023 and December 31, 2023, the tax reduction is only 30%, and if the charging station is installed between January 1, 2024 and August 31, 2024, the tax reduction is 15%. The amount of the tax reduction is limited to 1 500 euros per charging station and per taxpayer (non-indexed amount).
Businesses, companies and self-employed or professional people are not entitled to a tax reduction, but benefit from an increased expense deduction. This deduction is 200% for purchases between September 1, 2021 and December 31, 2022, and 150% for purchases between January 1, 2023 and August 31, 2024.
Important condition: the charging station must be freely accessible to all!
Investment deduction
In response to a parliamentary question from the end of 2021, the minister said that this increased expense deduction could in principle be combined with the investment deduction. The investment deduction is still 25% until the end of 2022 (as part of the recovery from the coronavirus crisis). After 2022, the taxpayer will also be able to make use of the increased investment deduction for environmentally friendly investments for this type of investment.
The minister's answer came as a bit of a surprise, because the investment deduction is in principle only possible if the use of the investment is not transferred to third parties and if the use of the investment is 100% professional. One of the conditions for the application of the increased cost allowance is precisely that the charging station is accessible to the public. The Minister did not consider this to be an issue and confirmed that the investment deduction could be applied for charging stations.
New bill
In April, however, the Council of Ministers approved a new bill that would explicitly exclude charging stations from the investment deduction if they qualify for an increased expense allowance. Companies that install a charging station exclusively for their own vehicles would retain the right to the investment deduction. But if the enhanced deduction is applicable, no investment deduction is available.
It is not clear from the bill, however, whether an investment deduction is possible when the charging station can also be used by employees, either for their own car or for their salary car. The final text should tell us more about this.
A smaller carrot, but one that taxpayers will be able to enjoy for longer.
The bill, which at the time of writing had not yet been tabled in Parliament, also provides that the 200% deduction percentage would not apply until the end of 2022, but until 31 March 2023. Many installers are clearly experiencing supply problems, so that many contractors have already been told in April 2022 that an installation in 2022 would no longer be possible.
At this time, there is no intention to extend the full term - that is, beyond August 31, 2024.
But as this bill also makes clear, two years is an eternity in tax law and much can still change between now and then!
