How taxation makes the company’s electric car more attractive

Did your employer ask you to be patient before ordering a new company car? The explanation is probably due to the fact that, for employers, moving from a fleet of vehicles with a combustion engine for a fleet of electric cars it’s a puzzle.

Where will the battery be recharged: in the office, at home, in a public terminal? Furthermore, although the catalog prices of electric models are higher than those of thermal models, almost no car still fits into traditional rental budgets. Many employees, therefore, fear losing comfort if forced to opt for an electric vehicle.

According to data from HR services company Acerta for 40,000 companies, as of April 30, the catalog value the average number of the company’s registered electric cars was € 51,908.56, against € 34,423.71 for fossil fuel cars. On the other hand, over the past three years, the purchase price of a leased electric car has not increased as much as that of a combustion engine car.

24%

In Q1 2022, 24% of the company’s cars ordered are electric.

“Employers are sometimes startled by the price difference,” notes Karolien Van Herpe, legal advisor at Acerta. However, many companies have already switched to electric cars, as evidenced by requests from leasing companies. According to data from Renta, the sectoral federation of leasing companies, in the first quarter, 13% of new registrations were for electric cars. And of the company’s cars ordered in 2022, 24% are electric.

A new method of calculating the “company car” budget favors orders for electric vehicles, which are always more numerous. If employers rely on the monthly rent – ​​that is, the classic lease – their workers who opt for electric will have no choice but to resort to a smaller model, as it is cheaper.

But more and more companies are interested in total cost of ownership (TCO – Total Cost of Ownership). In this case, an electric car is not necessarily more expensive, as shown by Renta’s simulations (see box). In addition to the purchase price, the TCO takes into account consumption costs, taxes and tax deductibility.

1. The company’s polluting cars were gradually phased out

In late 2021, Finance Minister Vincent Van Peteghem (CD&V) reformed the company car tax – through its law on the greening of vehicles – to phasing out internal combustion engines from the marketand. In fact, company cars travel on average much more kilometers than private cars and end up on the second-hand market, thus becoming private cars.

100%

As of January 1, 2026, only company cars that no longer emit greenhouse gases will be 100% deductible.

From 2026, any new company car will only be tax deductible what if she no longer emits greenhouse gases. In other words, only if it’s electric. This tax advantage will gradually decrease over the next few years, from 95% in 2027 to 67.5% in 2031.

For plug-in hybrid business cars purchased on or after January 1, 2023, the tax deductibility of gasoline or diesel costs will be limited to 50%. The objective is to encourage users to favor electric driving in their hybrid.

The executive planned transition period. Up until June 30, 2023, you can still choose a petrol or diesel car under current conditions. A transitional provision will then apply from 1er July 2023 for thermal cars. Diesel or gasoline cars purchased between 1 July 2023 and 31 December 2025 will see their tax deductibility gradually decrease. In 2025, the deduction will be capped at 75%, in 2026 at 50%, in 2027 at 25% and in 2028 it will be reduced to 0%.

If you replace your car on time, the current tax deduction regime continues to apply for the duration of the contract. The costs of diesel or gasoline vehicles are deductible up to 50 to 80%, depending on the type of vehicle. Electric cars can be deducted 100%.

2. The increasingly expensive CO2 contribution

The authorities have another weapon. If you benefit from a company car as an employee, your employer pays a solidarity contribution to the National Social Security Office (ONSS), called CO₂ contribution. In the coming years, it will increase significantly for gasoline and diesel cars, but also for hybrids. In 2023 and 2025, this contribution will be multiplied by 2.25 and 2.75, respectively. From 2026 it will be multiplied by 4 and from 2027 by 5.5. It means that By 2026, the social benefit for company cars with CO₂ emissions will have all but disappeared.

An example. For a diesel BMW 3 series that emits 129 grams of CO₂ per kilometer, the CO₂ contribution is 61.81 euros per month. From 2023, this value will be 139.07 euros, rising to 399.95 euros in 2027.

In parallel, the minimum contribution for CO₂-free cars will also increase. It will go from the basic value of 20.83 euros per month currently, to €31.15 in 2028. This increase aims to prevent the company’s emission-free car from becoming an interesting additional salary, to the detriment of ONSS revenue.

The BMW 3 Series diesel more expensive than the Tesla Model 3

If companies consider the total cost of a rental car, the TCO, an electric car does not necessarily cost more. This is what emerges from the simulations carried out by Renta, the sectoral federation of leasing companies.

Based on current energy prices, the TCO of a BMW 3 Series Sedan 318d (diesel) is 1,343 euros per month. For Tesla Model 3 RWD Plus standard, TCO is 1,143 euros per month.

For a Volkswagen Golf VIII 1.0 eTSI Life, the TCO is 942 euros per month. The electric counterpart of the Golf, namely the Volkswagen ID3, costs 887 euros/month. “The more kilometers you travel, the more economical the electric vehicle becomes”, adds Frank Van Gool, director of Renta.

The fact that electric cars are so advantageous in comparison is not only due to the more favorable tax regime, but also to the lower consumption costs. And even with the rise in the price of electricity, it still happens.

The price of diesel and gasoline has increased by about 40% compared to last year, but the price of electricity has more than doubled. Previously, consumption costs for an electric vehicle were around 50% lower than for a comparable diesel vehicle. Today, the difference was reduced to 35%.

“At first glance, this puts the TCO of electric vehicles at a disadvantage,” explains Frank Van Gool. But at the same time, leasing prices for electric cars are evolving favorably, mainly due to growing confidence in the used value of these vehicles.

3. Charging stations with tax incentives

“We send the message to companies not to wait too long to switch to electric cars”, explains Karolien Van Herpe of Acerta. “Not only because the car is advantageous in itself, but also because there are tax advantages for the charging stations that the company installs. Until the end of 2022, all costs incurred for this purpose are 200% deductible. In 2023 and until the end of August 2024, up to 150% can still be deducted. The condition is that the terminals are accessible to the public outside working hours.



“Until the end of 2022, the costs of installing a charging station by a company are 200% deductible.”

Karolien Van Herpe

legal advisor at Ace

The installation of charging stations in employees’ homes is less and less discussed. “The rental companies take great care of it. Most of the time, the packages they offer include a home charging facility “The only point that can be a problem is that you have to have space to install the terminal: in an alley or on the side of the house.”

If this is not possible, a public charging station within a 10 kilometer radius of the home combined with a charging station at the workplace is a valid solution. Charging at a public station costs the employer more than charging at home.

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