Company cars: benefit in kind 2022
March 2022 – When an employer provides a company car to an employee or a company director, the employee or company director is taxed on the resulting benefit. The calculation of the benefit depends, among other things, on the CO2 emission of the vehicle in relation to the average emission of the Belgian car fleet. In 2021, this average emission has fallen and your tax bill will therefore increase.
Benefit of any kind
The calculation of the benefit in kind related to a company car is carried out by applying the following formula
Catalogue value x CO2 percentage x 6/7 x age correction
The catalogue value is the price to be paid for the vehicle, including VAT and any options, but without any discounts. The catalogue value does not change, but a certain depreciation of the value based on the age of the vehicle is taken into account. In the first year, the age-related correction percentage is 100%. It then decreases by 6% each year. The percentage by which the catalogue value is multiplied is therefore :
100%, from 0 to 12 months ;
94%, from 13 to 24 months;
88%, from 25 to 36 months;
etc.
However, the age correction percentage can never be less than 70%.
The formula also refers to a CO2 percentage (or CO2 coefficient). This percentage is basically 5.5%, but must then be corrected.
Step 1
The first step in this correction is the comparison of the CO2 emission of the vehicle with the average emission of the Belgian car fleet during the twelve months preceding the month of October of the year preceding the taxable period. For the 2022 income, the average emission from October 2020 to September 2021 must therefore be compared.
This average issue is published every year in December. For the 2022 revenue year, the average emission is as follows
91 g/km for petrol, LPG or natural gas vehicles; and
75 g/km for diesel vehicles.
In 2021, these averages were 102 g/km and 84 g/km respectively.
In 2020, they were 111 g/km and 91 g/km respectively.
In 2019, they were 107 g/km and 88 g/km.
Step 2
In Step 2 of the CO2 percentage calculation, a 'correction' is applied to the base CO2 percentage (the 5.5%), based on the average emission of your vehicle. This percentage decreases or increases by 0.1% for every gram of CO2 that the vehicle emits less or more than the average emission. The final result should be between 4% and 18%.
If, for example, the diesel vehicle has a CO2 emission of 100 g/km (instead of 75 g/km), the CO2 percentage for the 2020 income year is equal to :
5,5 + [0,1 x (100 - 75)]. So 5.5 + 2.5, or 8.0%.
A decrease in the average CO2 emission will therefore increase the taxable benefit of your current company car.
Minimum benefit
Finally, the law also stipulates that the benefit may not be less than 1 400 euros (for the 2022 income year).
Lower CO2 emission standard, older vehicle, higher tax
Let's assume that in 2019 your company has made a diesel car worth 40 000 euros available to you. The car has a CO2 emission of 100. The benefit is therefore :
= 40 000 euros x 6/7 x (age) x CO2 percentage after correction.
= 34 285,71 euros x age x CO2 percentage after correction.
In 2019, the CO2 percentage is equal to :
5,5 + [0,1 x (100 - 88)] = 6,7 %.
The taxable benefit on an annual basis is :
34 285,71 euros x 6.7% = 2 297,14 euros.
In 2020, the CO2 percentage is equal to :
5,5 + [0,1 x (100 - 91)] = 6,4 %.
The taxable benefit on an annual basis is
34 285,71 euros x 6.4% = 2 194,29 euros, to be multiplied by the age correction percentage (94%) = 2 194,29 euros x 94% = 2 062,63 euros.
In 2021, the CO2 percentage is equal to :
5,5 + [0,1 x (100 - 84)] = 7,1 %.
The taxable benefit on an annual basis is :
34 285,71 euros x 7.1% = 2 434,29 euros, to be multiplied by the age correction percentage (88%) = 2 434,29 euros x 88% = 2 142,18 euros.
In 2022, the CO2 percentage is equal to :
5,5 + [0,1 x (100 - 75)] = 8,0 %.
The taxable benefit on an annual basis is
34 285,71 euros x 8% = 2 742,86 euros, to be multiplied by the age correction percentage (82%) = 2 742,86 euros x 88% = 2 249,14 euros.
In other words: from 2020 onwards, the taxable benefit of your vehicle will increase as your vehicle gets older.
As a result of the greening of mobility, the average CO2 emission will drop drastically within a few years. The age correction will no longer be sufficient to compensate for the increased benefit.
