Company cars: benefits of all kinds in 2021
February 2021 – Where an employer makes a company car available to an employee or a manager of an undertaking, that employee or manager 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 2020, after two years of increase, this average emission has gone down again. This is good news for the climate, but not so good news for your wallet.
Advantage of all kinds
The calculation of the benefit of any kind related to a company car is carried out according to the following formula:
catalogue value x percentage of CO2 x 6/7 x age correction factor
The catalogue value is the price to be paid for the vehicle, including VAT and any options, but without any discounts. This catalogue value does not change afterwards, but a certain depreciation of the value based on the age of the vehicle is taken into account. In the first year, the age correction percentage is 100%. Each year, this percentage decreases by 6%, but cannot be less than 70%.
The formula also includes a CO2 percentage (also called the CO2 coefficient).
How is this percentage calculated?
The basic percentage is 5.5%, but it must then be corrected.
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 October of the year preceding the taxable period. For 2021 income, this is therefore the average emission from October 2019 to September 2020.
This average issue is published annually (during the month of December). For the income year 2021, the average issue is as follows:
102 g/km for gasoline, LPG or natural gas vehicles; and
84 g/km for diesel vehicles.
This represents a decrease compared to previous years.
In 2020, the averages were 111 g/km and 91 g/km respectively.
In 2019, the averages were 107 g/km and 88 g/km respectively.
The second step in calculating the CO2 percentage is the conversion of the difference between the vehicle's emission and the average emission into a "correction" of the base CO2 percentage of 5.5%. This percentage decreases or increases by 0.1% for each gram of CO2 that the vehicle emits less or more than the average emission. The percentage must be between 4% and 18%.
If, for example, your diesel-powered vehicle has a CO2 emission of 100, the CO2 percentage is 5.5 + [0.1 x (100 - 84)]. So 5.5 + 1.6: the percentage of CO2 is 7.1%.
Minimum benefit
Finally, the law also stipulates that the benefit cannot be less than 1,370 euros (for the income year 2021).
The reduction in the average CO2 emission will still cost you money.
The lower average CO2 emission increases the taxable benefit of your current company car.
Example: in 2019, a company made a diesel car worth 40,000 euros available to an employee. The car has a CO2 emission of 100. The benefit is equal to 40,000 euros x 6/7 x (age) x CO2 percentage = 34,285.71 euros x CO2 percentage.
In 2019, this CO2 percentage is equal to [(100 - 88) x 0.1] + 5.5% = 6.7%. The benefit is therefore €2,297.14 on an annual basis.
In 2020, the percentage of CO2 is equal to [(100 - 91) x 0.1] + 5.5% = 6.4%, i.e. a taxable benefit of €2,194.29. This amount is then multiplied by 94% (age correction): €2,062.63.
In 2021, the CO2 percentage is equal to [(100 - 84) x 0.1] + 5.5% = 7.1%. The taxable benefit is now 2,840 euros. The age correction is now 88%, so that in 2021 the taxable benefit is equal to 2,499.20 euros.
In other words, although your vehicle is now three years old, your taxable benefit is higher than in the first year.
It can be expected that over the next few years the average CO2 emission will continue to fall because more and more employers are investing in environmentally friendly cars and electric cars.
