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The tax reforms resulting from the so-called 'Summer Agreement' (Zomerakkoord | Accord d'été) will enter their final phase in 2020. This article will briefly discuss the impact on car taxation in personal income taxation and corporate taxation. 

Corporation tax deductions

Up to now, automobile expenses were deductible from corporation tax at 120%, 100%, 90%, 80%, 75%, 70%, 60% or 50%, depending on the CO2 emissions and the vehicle's fuel type. This arrangement will be completely replaced by a new formula for calculating deductions:

Deduction percentage = 120% - (0.5% x CO2 x coefficient)

The aforementioned coefficient amounts to:

  • 1: for vehicles with a diesel engine
  • 0.90: for vehicles with a natural gas engine and a taxable horsepower of less than 12 HP
  • 0.95 for all other vehicles (petrol, LPG, biofuel, etc.)

The percentage thereby amounts to

  • a minimum of 50% (40% if the CO2 emissions are higher than 200)
  • a maximum of 100% (i.e. electric cars drop back from 120% to 100%)

This deductible percentage will also apply to fuel costs, so these will no longer be deductible at 75% as standard.

Personal income tax deductions

The deductible percentage for automobile expenses in personal income tax (sole proprietorship or proven automobile expenses other than commuter traffic) will be calculated in the same manner as for corporation tax. However, and solely for personal income tax, the minimum deductible percentage will amount to 75% in respect of personal vehicles purchased prior to 1 January 2018.

Plug-in hybrid

Hybrid cars have low CO2 emissions owing to the presence of an electric motor alongside the combustion engine. However, if the capacity of the electric battery is limited, the personal vehicle will generally run on the combustion engine in practice.

This means these hybrid cars are considered a ‘false’ hybrid for taxation purposes. These hybrid personal vehicles will be taxed (in terms of both deductibility and benefit in kind) with their higher CO2 emissions in mind.

A ‘false’ hybrid personal vehicle is considered to be:

  • a hybrid with CO2 emissions higher than 50g/km, or
  • a hybrid equipped with an electric battery with an energy capacity of less than 0.5kWh per 100kg of vehicle weight

If a personal vehicle is considered a ‘false’ hybrid, this means that no regard will be paid to that vehicle's official CO2 emissions for calculating the benefit in kind or the deductible percentage, but instead to:

  • these CO2 emissions multiplied by 2.5, or
  • the CO2 emissions of an equivalent vehicle that is not equipped with a hybrid engine

The Administration has tasked car manufacturers and importers with determining an equivalent vehicle for each of their ‘false’ hybrids, under the Administration's supervision. An approved list of equivalent vehicles has not yet been announced by the Administration, however, even though the new rules will enter into force shortly.

It is important to note that ‘false’ hybrid cars purchased prior to 1 January 2018 are exempt from this, and are thereby not taxed on the basis of these higher CO2 emissions.


It is clear that the use of the deductibility formula above will mean that almost every personal vehicle will have its own deductibility percentage. For accountants needing to enter all automobile expenses into the books, this will be a nightmare. For companies with a large vehicle fleet, it will be an almost impossible task.

In its Annual Report for 2018, the Ruling Commission stated that one taxpayer asked whether they could deduct all automobile expenses based on an average deduction percentage for their entire vehicle fleet. The Ruling Commission refused the request, as there was no legal basis for deducting automobile expenses based on an average deduction percentage. We recommend that legislators take the initiative here.

Which CO2 emissions?

As a result of Dieselgate, the method for measuring CO2 emissions was completely changed. Under the old method, the New European Driving Cycle (NEDC), CO2 values were measured that were far lower than the actual CO2 emissions.

A new method was imposed for this reason: the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). Personal vehicles whose CO2 emissions were measured under this method produce a far higher value.

It was not the intention that this would lead to higher taxes, simply because the measurement method had changed. For this reason, an NEDC 2.0 CO2 emission value will also be calculated for personal vehicles whose CO2 emissions were measured using the WLTP method. This NEDC 2.0 value relates to CO2 emissions that should be comparable to the CO2 emissions measured using the NEDC method. The NEDC 2.0 value will not be measured, but instead converted from the WLTP value.

The WLTP method applies to:

  • new models from 1 July 2017
  • newly-produced cars from 1 September 2018

A brief summary:

  • for old models (prior to 1 July 2017) or old cars (produced before 1 September 2018), there will be only 1 CO2 value, i.e. NEDC
  • for new models (from 1 July 2017) or new cars (produced after 1 September 2018), there will be 2 CO2 values:
    • WLTP: measured using the new method
    • NEDC 2.0: converted from the WLTP value

The NEDC 2.0 value may be used as a basis for calculating the benefit in kind and the deductibility percentage, at least until 31/12/2020. From 2021, the new arrangement will need to be decisive here.

Since 1 July 2019, CO2 emissions are no longer stated on the registration certificate. It has now been confirmed, on the basis of a parliamentary question[1], that the data on the certificate of conformity will be the same in principle. It is also possible to look up the CO2 emissions on the FPS Mobility's website[2], based on the vehicle's chassis number (vehicle status).

[1] Oral Question No 55000697C Kathleen Depoorter, 22 October 2019, Parliamentary Committee for Finance, Legislative document Criv 55 Com 037, 23



These new regulations on deductibility will enter into force from the 2021 tax year, where the taxable period begins on 1 January 2020 at the earliest. If the company's financial year was shortened or lengthened after 26 July 2017, the applicability of these regulations will not be affected by this change to the financial year.


The new rules on the deduction percentage for automobile expenses and the method of determining CO2 emissions will both prove troublesome for accounting and tax returns.

If you still have questions in this regard, then please do not hesitate to contact


[1] Oral Question No 55000697C Kathleen Depoorter, 22 October 2019, Parliamentary Committee for Finance, Legislative document Criv 55 Com 037, 23


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