Transitioning to an environmentally friendly fleet… with the tax authorities’ help?

Deduction of car expenses

Which scheme applies to a specific car depends on when the vehicle was purchased, hired or leased. The relevant date here is the order date, not the delivery date. Current rules governing deductibility remain fully applicable for both leased and owned vehicles.

• Purchased on or before 30 June 2023
  Existing rules governing deductibility remain applicable.

• Purchased between 1 July 2023 and 31 December 2025
  Maximum deduction rates for vehicles with CO2 emissions (including hybrids) will decrease progressively, according to the following schedule:
  • 75% as from the 2026 assessment year
  • 50% as from the 2027 assessment year
  • 25% as from the 2028 assessment year
  • 0% as from the 2029 assessment year

• Purchased on or after 1 January 2026
  The option to deduct expenses for company cars disappears entirely for vehicles with CO2 emissions. From this date, deduction of expenses will only be possible for cars with zero carbon emissions (electric and hydrogen cars).

• In the next few years, while carbon-neutral cars will remain 100% deductible, this benefit will be reduced for vehicles purchased from 2027. Depending on the year of purchase, the deduction rate will decrease as follows:
  • 2027: 95%
  • 2028: 90%
  • 2029: 82.5%
  • 2030: 75%
  • From 2031: 67.5%

Investment in charging infrastructure

To encourage adoption of electric cars, it is important to also ensure suitable facilities for their use such as sufficient, efficient charging stations. The related incentives differ for companies and private individuals. If a private individual purchases a home charging station between 1 September 2021 and 31 August 2024, this will entitle them to a tax reduction of up to EUR 1,500. To encourage private individuals to make the switch faster, the amount of this reduction will decrease gradually with time:

• Between 1 September 2021 and 31 December 2022: 45%
• Between 1 January 2023 and 31 December 2023: 30%
• Between 1 January 2024 and 31 December 2024: 15%

Companies will be entitled to a higher deduction of expenses, with an emphasis on investments in publicly accessible EV charging stations. This involves charging stations in public car parks at shopping centres, supermarkets and offices, for example. Such chargers must be available to the general public both during and outside normal business hours. For companies, again, the longer they wait to make the investment, the lower the deduction rate will be:

• Between 1 September 2021 and 31 December 2022: 200%
• Between 1 January 2023 and 31 December 2024: 150%

Green HGV and refuelling and charging infrastructure

In addition to the changes for company cars, the law also provides for a further increase in the investment deduction for purchases of carbon-free heavy-goods vehicles, refuelling infrastructure for blue, green and turquoise hydrogen and electric vehicle charging infrastructure. The usual investment deduction is 13.5%. This is an additional increase on top of this rate and, again, is dependent on the year of purchase and decreases annually:

• 2022 and 2023: 21.5%
• 2024: 16%
• 2025: 10.5%
• 2026: 5%

Benefit in kind
Also important to note: there will be no change in the calculation of the benefit in kind. The BIK will still increase from 2022, however, as one of the factors on which this calculation is based is an annually defined reference value for CO2
emissions. The lower the reference value, the higher the benefit in kind will be. As more and more electric cars are registered in the coming years, this value will continue to drop along with the average (reference) emissions level.

Support measures
In addition to the various tax incentives, the Flemish government also offers support for that make environmentally friendly and energy-efficient investments. Thanks to the Ecology Premium Plus (“Ecologiepremie+”), companies can apply for subsidies for, for example, CNG vans (up to 3.5 tonnes), CNG or LNG heavy goods vehicles (over 3.5 tonnes), hydrogen-powered fuel cell vehicles, refuelling infrastructure (CNG, LNG, hydrogen), electric vehicle charging stations with power ratings higher than 50 kW, electric or CNG pressure washer trailers or the installation of diesel particulate filters in existing heavy vehicles. Both SMEs and large enterprises are eligible, and the application must take place before the investment is made. The subsidy may cover between 3% and 55% of the investment, depending on the technology in question and size of the enterprise submitting the application.