Ten-year plan for green mobility
September 2021 – At the end of May, the Minister of Finance received the green light (!) from the government for a thorough reform of the tax deductibility of private cars for professional use. Fossil fuel cars are being pushed out, but for electric cars too, the deductibility will be limited. The government has given itself a decade to achieve this.
Company cars
First point: which cars are involved? Passenger cars, estate cars and minibuses are covered. The reform does not concern light commercial vehicles. However, the draft bill announces that measures will be taken to ensure that "fake" light commercial vehicles are not designed. Strict guidelines already exist in this respect, but car manufacturers who wish to be ingenious are thus warned.
The second point of the reform concerns the deductibility of car-related business expenses. This includes the costs of your car as a self-employed person or as an employee (for commuting to and from work), but also the costs of the car that your company provides (the salary car).
Please note: hybrid cars are also affected by the reform. Let's start with cars that are exclusively powered by a combustion engine.
Combustion engine
For now, nothing changes. The car you buy today is subject to deductibility limitations that depend on its CO2 emissions.
This will be the case until 30 June 2023: if you buy (or lease) a car before 1 July 2023, the deductibility is limited to between 100% and 50%, depending on the vehicle's CO2 emissions. CO2 emissions above 200 g/km are penalised by a limitation of the deductibility to 40%.
In personal income tax, a special regime applies to cars acquired before 31 December 2017. The deductibility was then limited to 75% and remains unchanged.
These limitations on deductibility continue to apply as long as you are in possession of the vehicle.
1 July 2023 is an initial pivotal date: if, between 1 July 2023 and 31 December 2025, you buy a fossil-fuelled car, the limitation on deductibility on the basis of CO2 emissions still applies, subject to two changes:
the lower limit of 50% (and 40% for CO2 emissions over 200 g/km) disappears
the upper limit (currently 100%) is reduced to 75%.
This upper limit is reduced to 50% from the 2027 tax year and to 25% from the 2028 tax year. Finally, as of the 2029 tax year, the deductibility disappears for fossil-fuelled cars purchased between 1 July 2023 and 31 December 2025.
The second pivotal date is 1 January 2026. The rule is very simple: the deduction disappears for cars with combustion engines purchased or leased from 1 January 2026.
Plug-in hybrid cars
Currently, the same rules apply to plug-in hybrids as to cars with combustion engines. However, because they can also run on electricity, plug-in hybrids have particularly favourable CO2 emissions and are therefore (almost) 100% tax deductible. Fake hybrids" (where the capacity of the electric motor is very small in relation to the weight of the car) cannot claim this scheme.
For cars purchased from 1 January 2023 onwards, the deductibility of the purchase of fossil fuel is limited to 50%. The car itself and the electricity purchased are therefore not affected, only the fossil fuel. The measure also does not apply if you buy your car before 1 January 2023.
However, as mentioned above, business expenses are not deductible for cars with combustion engines purchased from 1 January 2026. This is also the case for hybrid cars.
Carbon-free cars
The deductibility of business expenses for a carbon-free car remains unchanged at 100%.
The cut-off date here is 1 January 2027. In the case of purchase, leasing or rental after 1 January 2027, the deductibility is limited according to the year of purchase, leasing or rental,
i.e. :
95% in case of purchase, leasing or rental in 2027
90% in case of purchase, leasing or rental in 2028
82.5% in case of purchase, lease or rental in 2029
75 % in case of purchase, leasing or rental in 2030
67.5 % in the case of purchase, leasing or rental from 1 January 2031.
Accompanying measures
The reform includes other measures in connection with the deductibility of business expenses related to cars.
A first measure concerns employees who use their own car for commuting to work. They currently benefit from a flat-rate deduction of 0.15 euro/km. This flat-rate deduction will disappear from 2026 if the vehicle they use is no longer deductible according to the above rules. Therefore, if the employee uses a car purchased before 1 July 2023 or an electric car, nothing changes.
A second measure to accelerate the switch to an electric car concerns charging stations. Private individuals who have a charging point installed between 1 September 2021 and 31 August 2024 will receive a tax reduction. The rate of the tax reduction depends on when the charging point is purchased:
between 1 September 2021 and 31 December 2022, the tax reduction amounts to 45%.
between 1 January 2023 and 31 December 2023, the tax reduction is 30%.
between 1 January 2024 and 31 August 2024, the tax reduction is 15%.
The maximum amount of the tax reduction (not indexed) is 1,500 euros per charging station and per taxpayer.
It must be an intelligent charging point (the time and power of charging can be controlled) and only green electricity can be used (produced by your own solar panels or obtained through a 100% green electricity contract with the electricity supplier).
A similar measure exists for businesses (companies or self-employed) that purchase a charging station. For a purchase between :
1 September 2021 and 31 December 2022, the deduction is 200
1 January 2023 and 31 August 2024, the deduction is 150%.
However, it must be a charging station accessible to the public.
A third measure is aimed at the purchase of zero-carbon trucks. A higher investment allowance is provided for the purchase of such a (new) zero-carbon truck, but also for the hydrogen refuelling infrastructure and the installation of an electric charging station. The applicable rate is as follows:
35% in 2023
29.5% in 2024
24% in 2025
18.5% in 2026
13.5% in 2027
The fourth accompanying measure concerns an extension of the mobility budget. The mobility budget allows employees who have a company car or who are entitled to one to exchange the budget of this company car for more ecological alternatives. From 1 September 2021, the list of alternatives will be expanded. The purchase of a scooter, public transport season tickets for members of the household and parking costs related to the use of public transport, for example, will now also be taken into account. But also the purchase of a home closer to the workplace. This last measure already applied, but is now made more flexible.
Finally, let's not forget the solidarity contribution for company cars, which will increase sharply over the next few years (at least for cars bought, leased or rented from 1 January 2023). The calculation method (CO2 emissions) remains unchanged, but the rate will increase significantly for cars with combustion engines. Emission-free cars will be subject to a minimum amount, which will also increase gradually.
Polluting company cars running on diesel or petrol are busy making their last mile. Most car manufacturers are already investing heavily in electric cars. But this project goes a step further. It aims not only to move us away from fossil fuels, but ultimately to move us away from cars as well. The coronavirus crisis has shown that this is entirely possible... within certain limits.
