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What is your opinion on company cars in Belgium?
I am currently a student studying in Belgium and am researching the pros and cons of the tax expenditures applied to company cars in Belgium for a paper that I am writing for class.
Do you drive a company car in Belgium? What do you think of the tax expenditures applied to company cars? Would you want a higher salary instead of the car?
Thanks so much for your feedback and time!
The company car system in Belgium is bizarre. Yes, I would happily have taken a cash alternative and driven something smaller and cheaper than the new E class Mercedes I ordered every two years if I could save some cash instead. But there is no cash alternative that makes up for the car. It would be taxed to death.
By the same token, I would rather have wages than luncheon vouchers which always felt like I was spending charitable food stamps, but no cash alternative on offer. It all comes down to the obscene tax on wages, employers have to try to find ways to compensate employees when wages are simply confiscated.
Anyway, the company car is doomed. It's an easy cash cow and like all jealousy taxes in socialist countries, a huge tax on these cars will get enormous approval and will happen.
It costs about €500/month to run a small car, buying new and running it for 5 years then replacing it.
That costs about €50/month extra tax as benefit in kind.
It can cost over €1200/month to increase net pay by €500.
Well an obvious pro (for Belgium) is the huge industry that exists and centres around the company cars. From the point of sale, to the ongoing maintenance and running of the cars, the tax receipts from salaries, fuel sales, sales, leasing and all the maintenance must be huge!
The obvious con is the ludicrous amount of diesel cars on the roads and the damage to our health!
Unwinding this tax perk would be costly for Belgium, and on a personal level we have no interest in buying a car here and paying for ongoing maintenance and any hassle that comes with it. It's easy and straightforward for us. We ordered a new Mercedes it arrived and we do nothing other than to drive it, put fuel in it at someone else's expense and send an email when something needs to be done.
However I do think it is very odd that there is no cash alternative for people that don't want the stress free option, I also think it inappropriate that at times even the most junior people are given new flash cars and they should look at fuel cards and think about getting rid of them. Quite a lot of my partners colleagues drive silly distances every day because they don't have to pay for the fuel and I think if people had a cash option then some may opt for cash and it may help with the traffic problems and pollution.
In the UK you are usually given an allowance for company cars and usually you have to reach middle management for that perk. You can get a car or take the cash and you are taxed accordingly. You pay for your fuel as well.
I might be being pedantic, but if you're a student, and writing a paper on it, you should at least try and be correct with your terminology.
Although "tax" plays some part in this, the other very significant cost to an employee and the employer is social security charges, which for people on even moderately above median salaries is appallingly high.
These types of non salary benefits are typically taxable benefits, so they still incur taxes, however the real benefit is that for the most part, they do not incur social security charges either to the employee or employer.
I find it ludicrous. I live 25 kms from Brussels on a direct train line. I have neighbours who have company cars which sit on their drives every day of the week. They take the train (at their own expense) every day to work as driving into Brussels would be madness when the train takes 20 mins. It is a ridiculous situation when somebody is forced to have a company car instead of a salary increase. I might add that my husband also has a company car which sits on our drive. However, luckily for him his company also pay for his train fare.
I think it depends on your work positions, if you are a sales person, or a consultant, it is handy to have a company car to allow you having easier access to your clients.
However in Belgium, the concept of company car is used at another level (almost abused), anyone even a graduate can have a fancy company car while their salary is very low.
And without doubting it is causing a lot of social problems in Belgium and people started discussing it already, check this article in my blog for more: http://www.linjiang-online.com/?p=400.
Lin
