Even if the new automobile taxation does not officially come into force until 2020, several measures have already been introduced at the beginning of 2018 to ensure a smooth transition. CO 2 emissions will be even more important for the deductibility of vehicle costs. But that does not change the fact that a company car remains, both for the self-employed and for employees, an attractive option for reducing costs.
What is a company car?
A company car is a car whose financing and car expenses are paid for by the company. Due to the high wage costs in Belgium, the company car has established itself over time as the most tax-efficient benefit for employees. Converting the value of a company car into a salary equivalent is not financially feasible for most companies. As an employer or sole proprietor, you can also deduct part of the financing and car expenses, which allows you to limit your profits and reduce your taxes.
A company car, an interesting benefit for employees – Benefits
Company car or higher salary? This is a question that many employees have been asking themselves since the agreement on the mobility budget. In many cases, a company car will still be more advantageous than a higher salary, because it saves you a lot of costs. Your employer not only settles all the terms for you, but many companies also cover all car costs: gas card, repairs, maintenance… You only have to pay parking and traffic fines because your employer does not cannot report them as automobile expenses.
The benefit in kind
As an employee, a benefit in kind (ATN) is deducted each month from your gross salary because you can also use the company car for personal use. The amount of your personal ATN depends on the catalog value (options included) and the CO 2 emissions of the company car. The most advantageous formula for you (additional remuneration or a company car) depends on your personal situation. But if you do the math, you’ll quickly notice that a company car is often more attractive than a higher salary.
The personal contribution
As an employee with a company car, you can choose to pay your employer a personal contribution for the private use of the vehicle. This contribution is then deducted from the benefit in kind (ATN), which reduces the Model X Tax Deduction which will you pay.
Cash for car
Companies that have had a company car policy for at least three years will soon be able to introduce cash for car regulations. Employees who have had a company car for at least twelve consecutive months over the past three years can exchange their company car for a sum of money and will henceforth bear their travel expenses. The calculated mobility allowance will be increased by 20% for petrol card holders.
- Warning ! The annual mobility allowance remains a taxable benefit equivalent to: 4% x 6/7 of the catalog value of the vehicle provided
- You can calculate how much money you will receive for your company car online. The exact amount is calculated according to the formula.
Flat-rate costs for employees without a company car
You don’t have a company car as an employee? You are then automatically entitled to the legal package for journeys made between your home and your place of work. This flat rate is calculated according to percentages that increase by income bracket and is automatically deducted from your taxable income. In addition to travel between your home and your place of work, the package also covers your train or bus subscription, the fitting out of a possible office at your home, the purchase of equipment and professional literature, etc.
Are the actual costs higher than the legal package? You can then declare your actual professional expenses on your tax form. In this case, you charge 0.15 euro per kilometer and per trip. Car expenses are deductible up to 75%. Keep in mind that you need to be able to prove all of these different fees and that comes with its fair share of red tape.
You are also entitled to a (taxable) mileage allowance from your employer. It is best to agree the exact amount of this in your individual employment contract. Your employer must also grant you an allowance for journeys made within the framework of your profession, for example, to customers or suppliers. This allowance is not taxable when it does not exceed the fixed legal mileage allowance and the number of kilometers does not exceed 24,000 kilometers per year.
A company car: significant deductible costs for employers and the self-employed
A company car has many advantages for both employer and worker. You can deduct car expenses from your profit as an employer, but also as a sole entrepreneur or freelancer. Although you can deduct 100% of the interest on your car financing, most car expenses are only partially tax deductible. The actual percentage depends on the CO 2 emissions of the company car. The rest of this percentage is included in disallowed expenses. Vehicle costs are therefore partially inadmissible expenses.
Deductibility of VAT
The VAT on your vehicle costs, your car financing and the monthly rent of your leasing or renting is not fully deductible, it is up to a maximum of 50%. The actual percentage of this deduction depends on your individual situation and your accountant will calculate it for you.
The benefit in kind for the self-employed
Are you the manager of a company, do you grant yourself a salary and personally benefit from the advantages of a company car? A benefit of any kind (ATN) is then deducted each month from your salary. As a company, you must add an amount equivalent to 40% of the ATN to the disallowed expenses of your company’s taxes for each company car you make available.