Are these measures already official ?
Not yet. In this article, we discuss the measures of a draft law that still need to be made official. By the end of this legislative process, the proposed measures may change and are not yet legally applicable. We will keep you updated on the situation's progress via Lex4You.
New draft law containing various provisions
Four years ago, the law of 25 November 2021 on the fiscal and social greening of mobility significantly reformed this regime by introducing a gradual reduction in the deductibility of CO₂ emitting vehicles.
Today, a draft law containing various provisions complements this reform by changing the taxation of company cars, especially for plug-in hybrid vehicles. However, these changes have a limited impact on corporate tax and mainly affect personal income tax.
We will outline the various measures included in this draft law below.
Removal of the deduction for vehicles with CO2 emissions ordered from 1 January 2026
In 2022, the government decided to gradually remove tax benefits for new company cars that are not carbon neutral (including plug-in hybrids) so that they will be phased out of the vehicle fleet by 2026.
Vehicles ordered before 1 January 2026: transitional regime
A transitional regime has been established for gasoline or diesel-powered vehicles purchased, leased, or taken on lease between 1 July 2023 and 31 December 2025.
In this context, the relevant date is the date of signing the order form in the case of purchase or the leasing contract in the case of leasing.
This regime states that from 2025 (tax year 2026), the tax deductibility for these vehicles will be gradually reduced.
As a result, the professional expenses related to the use of these non-zero emission vehicles are currently deductible at 75%.
Only electric company cars are still 100% tax-deductible until 2026.
However, from 2026 (tax year 2027), they will only be deductible up to 50%.
This deductibility will then decrease to 25% in 2027 and become zero in 2028.
For cars acquired before 1 July 2023, the old tax deductibility regime continues to apply, with a minimum of 50% and a maximum of 100%.
Vehicles ordered after 1 January 2026: no more deduction
Non-zero emission vehicles purchased from 1 January 2026
From 2026, the rules will become stricter. For gasoline or diesel-powered vehicles ordered from 1st January 2026, there will be no right to deduction. In other words, the professional expenses related to these vehicles will no longer be tax-deductible.
Commuting expenses
The expenses related to commuting using a 'personal' car are currently deductible at €0.15 per kilometre travelled.
Since from 2026 (tax year 2027), the deduction for car expenses will be removed for fuel cars, the deduction for commuting expenses will also be eliminated.
Consequently, commuting expenses will only be deductible for cars with zero CO2 emissions.
However, the flat-rate deduction of €0.15 per kilometre can still be applied for CO2 emitting cars covered by the transitional regime.
Zero emission vehicles (electric or hydrogen) purchased from 1 January 2026
Electric company cars will continue to be an exception in 2026 as they will still be 100% tax-deductible. However, they will be gradually taxed from 1st January 2027.
Specifically, it is planned that their deductibility will also be gradually reduced.
Specifically, cars acquired from:
- 2026 will be 100% deductible
- 2027 will be 95% deductible
- 2028 will be 90% deductible
- 2029 will be 82.5% deductible
- 2030 will be 75% deductible
- 2031 will be 67.5% deductible
For cars purchased, leased, or taken on lease before 31 December 2026, they remain 100% deductible for the following years.
Regarding corporate tax, the regime described above concerning the deduction of car expenses remains unchanged.
The draft law brings several modifications regarding plug-in hybrid cars. However, most of these modifications only apply to personal income tax.
New: increase in the maximum emission for 'false hybrids'
New definition of 'false hybrids'
The only change to the regime applicable to corporate tax concerns the definition of 'false' hybrids.
In practice, a distinction is made between "true" and "false" hybrids. For the latter, a specific rule applies to calculate CO₂ emissions in the deduction formula. The actual emissions of the vehicle are not taken into account, but those of a "corresponding model equipped with an engine using exclusively the same fuel." If no equivalent model exists, the emissions of the "false hybrid" are multiplied by 2.5.
For reference, 'false' hybrids are cars equipped with a fuel engine and an electric battery, but whose
- The battery has an energy capacity of less than 0.5 kWh/100 kg
- Or the CO2 emission exceeds 50 g/km
The draft law plans to increase the threshold for classifying a vehicle as a false hybrid, from 50 to 75 grams of CO2 per kilometre, for vehicles whose emissions are calculated according to the new Euro 6e bis standard, from 1 January 2025.
New Euro 6e bis standard
Since 1st January 2025, new plug-in hybrid cars launched on the market must meet a new stricter standard for calculating CO2 emissions: the Euro 6e bis standard. This is because the CO2 emissions of plug-in hybrid cars are actually higher than theoretically expected.
The Euro 6e bis standard provides a more realistic picture of CO2 emissions. In addition to laboratory tests, RDE (real driving emissions) tests that also measure emissions under real driving conditions must now be conducted. From 2026, all new PHEVs sold must meet this standard, even if their model was approved before 2025.
As a result, the CO2 emissions measured for hybrid vehicles will increase significantly. This is why the government intends to raise the threshold for false hybrids to 75g/km.
What about the benefit in kind ?
This change in the definition of 'false hybrid' also applies to the calculation of the benefit in kind (BIK) resulting from the provision of the 'false hybrid'.
For reference, the BIK for 'false hybrids' is calculated not based on the CO2 emission of the vehicle concerned but based on the emission of a "corresponding vehicle equipped with an engine using exclusively the same fuel." If no corresponding vehicle exists, the CO2 emission value of the 'false hybrid' must then be multiplied by 2.5.
Plug-in hybrids more tax advantageous for the self-employed
The government initially announced a new "deductibility schedule" for plug-in hybrids to make these vehicles more tax advantageous again. The previously planned limitation of deductibility has therefore been put on hold, resulting in an extension of the transitional period described above.
Learn more: "Adaptation of the deduction regime for plug-in hybrid cars"
This measure was ultimately deemed incompatible with the agreements made with the European Commission. Consequently, the new deductibility schedule will only apply to the self-employed (natural persons holding a VAT number) who are taxed under personal income tax.
What about fuel and electricity expenses ?
The draft law further provides that fuel expenses for plug-in hybrid vehicles purchased, leased, or taken on lease from 1 January 2026 will no longer be deductible as professional expenses. However, companies retain the current depreciation regime (75% in 2025, 50% in 2026, 25% in 2027, 0% from 2028).
The electricity (charging costs) remains deductible in the same way as electric vehicles (see above), namely 100% in 2026.
Schematic overview
|
Vehicles ordered |
Between 01/01/2023 and 30/06/2023 |
Between 01/07/2023 and 31/12/2025 |
Between 01/01/2026 and 31/12/2026 |
From 01/01/2027 |
|
Vehicles with CO2 emissions (including (P)HEV vehicles *) |
Old deductibility regime |
Gradually reduced deductibility (from the tax year 2026):
|
No right to deduction |
|
|
Zero emission vehicles |
100% deductibility |
Gradually reduced deductibility |
||
* A new deductibility schedule will apply to self-employed individuals (natural persons holding a VAT number) who are taxed under personal income tax.
Taxation of car expenses for non-profit organisations
Until now, car expenses were not taxed for non-profit organisations and other entities subject to corporate tax. This will change in 2026.
Indeed, from 1st January 2026, expenses related to vehicles will also be taxed under corporate tax (with the exception of public institutions) at a rate of 25%. This measure comes from the law of 25 November 2021, which aims to promote the greening of fiscal and social mobility.
The car expenses affected are those related to vehicles purchased, leased, or rented from 1st January 2026 (tax year 2027).
Specifically, the same deductibility regime as that provided for corporate tax will be applied. Non-zero emission cars ordered from 1st January 2026 will be fully taxable at 100%. Meanwhile, zero-emission vehicles will remain 100% deductible in 2026, and will then be gradually taxed from 2027 (as explained above).
Expenses related to zero CO2 emission vehicles purchased, leased, or rented before 31 December 2026 will remain exempt in the following years.
What expenses are affected?
The taxation applies to all expenses related to private cars (private cars, mixed cars, minibuses, and "false" utility vehicles), including:
- Leasing and rental expenses;
- Fuel expenses;
- Insurance;
- Road tax;
- Maintenance and repairs;
- Depreciation;
- Reimbursement of car expenses (for example, mileage allowances paid to employees). This applies to all journeys made from 1st January 2026.
What about the benefit in kind?
This measure has no impact on the benefit in kind (BIK) related to the provision of a car. This BIK remains subject to corporate tax (up to 17% if there is no fuel card or charging card, or contribution to fuel expenses, or 40% in all other cases).
What does Securex do for you?
Do you have questions regarding the impact of these measures on your company or your personnel policy? We would be happy to assist you. Contact your Securex Legal Advisor now at MyHR@securex.be.
