Tax greening of motor vehicles: the first deadline is fast approaching

Existing rules

For both personal and corporate income tax, the following formula is currently used to calculate deductions for company cars: 

120% - (0.5% x fuel coefficient x grams of CO₂/km)

The fuel coefficient is determined as follows:

• 1.00 for diesel vehicles
• 0.95 for other vehicles (petrol, electric, hybrid, LPG, biofuel, etc.)
• 0.90 for natural gas vehicles not exceeding 12 fiscal HP

The final deduction rate is always between 50% and 100%.

This formula does not apply to vehicles with carbon emissions equal to or exceeding 200 g/km. Nor is it applicable if there is no carbon emissions data available from the 2021 assessment year. For such vehicles, a flat rate deduction of 40% applies.

New rules

For company cars already in use currently, nothing will change. The same applies to private vehicles ordered on or before 30 June 2023. The relevant date here is the order date. That means the current long lead times for new cars will not have any negative consequences.

From 1 July 2023, deduction rates for company cars will decrease progressively depending on the exact date on which a car was ordered.

Does this mean nothing changes at all until 1 July 2023?

Not quite. If you wish to buy a plug-in hybrid, you should consider doing so before 1 January 2023. This is because from the 2024 assessment year, fuel cost deductions will be limited to 50% for any plug-in hybrid vehicles purchased, leased or hired between 1 January 2023 and 30 June 2023. There is no limit on electricity costs for these vehicles.

This means that if you order a hybrid before the end of the year, you may still deduct both fossil and electric fuel costs according to the above formula (which will often amount to nearly 100%). Will your order take place after 31 December 2022? In that case, you will only be allowed to deduct 50% of your fossil fuel costs.

What about charging stations?

Companies are encouraged to install more publicly accessible charging stations for electric (and plug-in hybrid) vehicles. The tax incentive for such expenses consists of a higher deduction rate of either 200% or 150%, depending on the time of investment.

To qualify for the 200% deduction increase, the investments must have occurred no later than 31 March 2023. The 150% increase applies to investments made between 1 April 2023 and 31 August 2024.

While the deadline for the 200% deduction rate was 31 December 2022 initially, this has been extended due to long lead times for charging stations.

Any questions? Please do not hesitate to contact one of our experts.