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Only electric company cars will be eligible for tax breaks from 2026

Illustration picture shows a plug-in hybrid BMW car with electricity charger, Monday 07 December 2020 in Bornem. (BELGA PHOTO DIRK WAEM)
06:04 19/05/2021

Federal ministers have reached an agreement on the principle of using the incentive of tax benefits to make the country’s fleet of company cars more environmentally friendly, according to a spokesperson for prime minister Alexander De Croo.

From 2026, only electric company vehicles will be eligible for a tax break. Existing contracts will not be affected, the spokesperson said. The government wants to create a "stable and clear framework" so that businesses and employees can make informed purchasing and investment decisions.

"This is an important step in making the company car fleet green and increasing the sustainability of mobility," finance minister Vincent Van Peteghem said.

The ruling coalition had already established in its government agreement that all new company cars should be environmentally friendly by 2026. Last April, Van Peteghem presented a proposal which aimed to phase out tax benefits for new cars from non-carbon-neutral companies, so that they disappear from the fleet by 2026.

Electric cars or other emission-neutral vehicles would be 100% tax-deductible at first before this deductibility is gradually reduced to the level currently established for petrol or diesel cars. The budgetary impact of this measure will be "closely monitored", said Van Peteghem.

There is also a tax cut for investments in charging infrastructure at home or in public places. Home charging station facilities for electric cars will lead to a tax reduction between 2022 and 2024. "In 2022, it will be a reduction of 45%, then 30% in 2023 and 15% the following year," the minister said.

Businesses that invest in a publicly available charging station between September 2021 and August 2024 will be able to count on an increased cost deduction. For investments made between September 2021 and December 2022, a 200% deduction rate will be applied. The following year, this rate will be reduced to 150%.

Written by Nick Amies