New Car Taxation: When Does Your Company Car Lose Its Tax Benefits?

The reform of car taxation is being implemented in three phases and has a fundamental impact on the tax deductibility of company cars. The acquisition date is key in each case and determines the applicable tax regime.

These changes primarily affect taxpayers subject to corporate income tax but may also have implications under the legal entities tax regime.

In this Tax Insight, we outline the key developments in car taxation and what they mean in practice for the tax treatment of company cars.
 

1. CORPORATE INCOME TAX 

A. Acquisition before 1 July 2023 – “grandfathering rule”

For vehicles acquired before 1 July 2023, the existing deduction regime (as applicable since 1 January 2020) remains unchanged.

Tax deductibility continues to be based on the CO₂ formula, applying the minimum and maximum thresholds in force at that time. 

For plug-in hybrid vehicles acquired as from 1 January 2023, fuel costs are furthermore limited to a maximum deductibility of 50%.

B. Acquisition between 1 July 2023 and 31 December 2025 – phase-out regime

For non-zero-emission vehicles (petrol, diesel and hybrids), a transitional regime applies:

• The existing deduction formula remains temporarily applicable
• As from assessment year 2026, the minimum deduction thresholds (40% and 50%) are abolished
• The maximum deduction percentage is gradually reduced
• In the absence of CO₂ data, no tax deduction will be allowed as from assessment year 2026

Electric vehicles acquired during this period remain 100% tax deductible.

C. Acquisition as from 1 January 2026

Non-zero-emission vehicles (petrol, diesel and hybrids) acquired as from 1 January 2026 will no longer be tax deductible (0%) for corporate income tax purposes. The related expenses will be fully disallowed, resulting in an increase of the taxable base.

Zero-emission vehicles acquired up to and including 31 December 2026 remain 100% tax deductible over their entire lifetime.

As from 2027, the acquisition of zero-emission vehicles will no longer be fully deductible, leading to a gradual reduction in deductibility.
 

2. ACQUISITION DATE DETERMINES THE TAX REGIME 

The acquisition date is legally decisive for the application of the new car taxation rules.

In the case of a direct purchase, whether financed through a loan or financial lease, the date of signing the purchase order is the relevant reference point. For leasing, renting or rental agreements, the relevant date is the date on which the contract is signed.

Where a vehicle is subsequently transferred to a leasing company under an operational lease, involving a transfer of ownership to that company, the date of this new agreement becomes decisive.

It is important to note that an extension of a lease agreement is, in principle, considered a new contract, which may impact the applicable tax regime. This is different where the extension terms were already contractually agreed upon at the outset.

In the context of tax-neutral reorganisations, the Minister accepts an administrative tolerance allowing the original acquisition date (purchase, rental or lease) to be maintained, so that the existing tax regime can continue to apply.
 

3. CHARGING INFRASTRUCTURE FOR ELECTRIC VEHICLES 

The limitation on tax deductibility is suspended for costs related to charging infrastructure for electric vehicles. This is a temporary measure that entered into force as from assessment year 2022.

Costs relating to charging stations acquired, rented or leased as from 1 January 2030 will be limited to 75% deductibility.

In such cases, the costs will be tax deductible up to a maximum of 75%, in line with the evolution of the deductibility of zero-emission vehicles.
 

4. WHAT ABOUT LEGAL ENTITIES TAX? AN INDIRECT BUT SIGNIFICANT IMPACT 

Although the legal entities tax regime does not provide for a traditional deduction of car expenses, the reform of car taxation also has a significant impact in this area. The legislator has opted to translate the deduction limitations applicable in personal income tax and corporate income tax into add-backs to the taxable base.

On the one hand, an add-back of 17% on the benefit in kind (BIK) remains applicable. In line with personal income tax and corporate income tax rules, this percentage increases to 40% where the association or foundation bears the fuel costs related to private use.

On the other hand, as from assessment year 2027, an additional add-back is introduced for emission vehicles acquired as from 1 January 2026, reflecting the non-deductibility of car expenses through an inclusion in the taxable base.

These rules mainly affect certain categories of legal entities (such as non-profit organizations and public entities) and may result in a significant tax impact despite the absence of a traditional cost deduction.

Zero-emission vehicles acquired, rented or leased as from 1 January 2027 also fall within the scope of this second add-back. The amount of this add-back corresponds to the applicable percentage (identical to the disallowed expenses in personal income tax and corporate income tax for the vehicle concerned) multiplied by the total costs relating to that vehicle.
 

HOW CAN WE HELP YOU?

RSM can assist you in analysing the impact of the new car taxation rules on your business, including:

• assessing your current fleet and identifying tax optimisation opportunities
• modelling the impact of future investments (hybrid vs electric)
• advising on leasing structures and contractual optimisation
• evaluating the impact on your effective tax rate and cash flows 

Given the increasing complexity and the importance of the acquisition date, a proactive approach is essential to avoid unexpected tax consequences.

For any questions regarding the above, please contact the Tax team of RSM Belgium via tax@rsmbelgium.be.