Company Cars and Taxation in Belgium: What Fleet and HR Managers Need to Know

Nicolas
5 days ago
4 min read

In Belgium, company cars dominate the new car market. Almost 6 in 10 new vehicles are registered as company cars — and a large portion of these are used not only for commuting, but also for private travel, often free of charge for the employee.

This setup may be convenient for both employers and employees, but it comes at a significant cost to public finances. A new working paper by the Federal Planning Bureau takes a deep dive into this issue and gives us fresh, data-driven insight into how company car taxation works — and what could change.

For professionals working in fleet management, HR, finance, or sustainable mobility, this study brings important facts to the table. Let’s break it down in plain language.

💸 Company Cars: Not Just a Perk, but a Major Tax Expenditure

The tax regime around company cars in Belgium creates large “tax expenditures” — revenue that the government forgoes due to favourable tax treatment.
These tax benefits include reduced income tax, no employee social security contributions, favourable VAT rules, and partial deductibility of car-related expenses for companies.
The study estimates that by 2028, these tax expenditures could amount to €5.2 billion per year if no policy changes are made.

Projections of the market share of new company cars in 2028

In short: company cars are taxed far more lightly than equivalent salary income, and this gap represents a major challenge — both for the public budget and for efforts to make corporate mobility more sustainable.

📊 A Benchmark Scenario: What If We Taxed Company Cars Like Salary?

The authors compared two situations:

The current system, with all existing tax advantages.
A benchmark system, where the value of the car is taxed as if the employee had to pay all car costs out of pocket — reflecting the true private benefit.

Using the CASMO model, which simulates the composition of the Belgian car fleet, the study calculated the financial and behavioural effects of removing tax advantages.

Key results in 2028 under the benchmark scenario:

+ €4.3 billion in additional income and social security taxes (linked to private use of company cars)
+ €0.6 billion from VAT no longer recovered
– €0.1 billion in corporate tax deductions

Net effect of the application of the benchmark on tax revenues from company cars

That’s a net increase of €5.2 billion in tax revenue, without even changing the number of company cars on the road.

Tax revenues linked to the private use of the company cars in 2026 per powertrain

🚘 What About the Fleet Mix?

The study also looked at how the powertrain mix of company cars would evolve under a more neutral tax system:

Plug-in hybrids (PHEV): market share drops from 27.8% → 25.6%
Electric vehicles (EVs): slight decrease from 34.2% → 33.5%
Gasoline and diesel vehicles: minor increases

Why this shift? Because the current tax system strongly incentivizes low-emission vehicles. If we remove those incentives, the share of EVs and PHEVs slightly drops — but the tax revenue per vehicle increases sharply.

📌 This suggests that EVs are only fiscally competitive because of current tax rules, not yet due to lower total cost of ownership.

📉 Is the Current System Still Justifiable?

For many years, company cars have been a pillar of compensation policy in Belgian companies — allowing employers to attract and retain talent without increasing gross salaries.

But this comes with a growing cost:

Unequal treatment of workers who do or do not have access to a company car
Incentives to drive more and own more polluting or oversized vehicles
Disincentives to develop alternative mobility offers, like mobility budgets, shared mobility, or public transport

As mobility evolves, and electrification becomes mandatory (notably for new company cars from 2026), it’s time to reflect on whether the current system is still future-proof.

📌 Implications for Fleet and HR Managers

If you’re in charge of fleet policy, employee benefits, or budget optimization, this study contains a few strategic signals:

✅ Key takeaways:

The cost gap between salary and company cars is very real — and increasingly visible to policymakers.
Electrification incentives are strong for now but may fade post-2026.
The mobility budget remains underused, yet offers a more equitable and flexible framework.
Tax authorities may start looking more closely at the real private use of company cars and fuel cards — prepare your reporting and internal policies accordingly.
Replacing cars with smarter mobility solutions (bike leasing, multimodal subscriptions, etc.) could become both a cost-efficient and future-aligned alternative.

🌱 At Next Mobility, We Believe in Smarter Fleets

This study confirms what many of us in the mobility sector already feel: the era of the company car as the default benefit is coming to an end.

Now is the right time to:

Reassess your fleet strategy
Benchmark the total cost of ownership (TCO) for different vehicle types
Explore the implementation of a mobility budget
Involve your HR, finance and CSR teams in a joint vision for sustainable corporate mobility