Each year in December, new reference emissions for the upcoming fiscal year are published by the Belgian Government in a royal decree. These reference emissions determine the size of the benefit in kind for corporate cars, and are based on the newly registered vehicles. However, the rapidly electrifying corporate vehicle fleet will lead to significant cost increase for employees that are still driving a vehicle with an internal combustion engine.
Benefit in Kind
When an employee can make use of the company car for private kilometres, the employee is taxed on a benefit in kind. This benefit in kind is considered a professional income, and your employer states this benefit on your pay slip 281.10 or 281.20. The employee receiving this benefit will therefore have to pay tax on the amount corresponding to the value of the benefit in kind. The amount is determined based on the following formula:
Benefit in kind (yearly) = fiscal value of the car * co2-coefficient * (6/7) * age-coefficient
The CO2 coefficient is between 4% and 18%, and is calculated as follows:
[5,5 + ((CO2 – reference emission) x 0,1)] %
For more information about the other components, see our earlier blog. For EVs and (not too expensive) PHEVs, a minimum BIK applies. The minimum benefit in kind is €1,600 in 2024, versus €1,540 last year.
Reference emissions
Minister Van Peteghem now proposed to no longer calculating only on the basis of the older European emissions standard NEDC, but also taking into account average WLTP emissions (Worldwide Harmonised Light Vehicle Test Procedure, a test method to determine emissions and consumption).
This calculation method would avoid that the reference emissions fall as much as with to the other calculation, flattening the shock effect. With the NEDC method, the reference emissions would drop by almost 40%, while moving to WLTP reduces the drop to only 6%
| Petrol | Petrol/Electric | Diesel | |
| Reference emission 2023 | 82 | 82 | 67 |
| Reference emission 2024 | 51 | 51 | 42 |
| Reference emission 2024 (proposal) | 77 | 77 | 63 |
Impact of reference emissions
Consider the following versions of the popular BMW X1, with data from DirectLease (Petrol, PHEV, Diesel)
| Model | xDrive23i (150kW) | xDrive25e (180kW) | xDrive23d (155kW) |
| Fuel type | Petrol | Petrol/Electric | Diesel |
| gr CO2/100 km (WLTP) | 146 | 16 | 125 |
| Catalogue value (incl. VAT) | € 48,650.00 | € 50,700.00 | € 51,350.00 |
The yearly and monthly benefit in kind would look like depicted below. Note that we added the minimum benefit in kind for EVs to the tabel, for reference.
| xDrive23i (150kW)
Petrol |
xDrive25e (180kW)
Petrol/Electric |
xDrive23d (155kW)
Diesel |
EV |
|
| BIK 2023 (ordered & delivered in 2023) | € 4,962.30 | € 1,738.29 | € 4,973.61 | € 1,540.00 |
| BIK 2024 (ordered & delivered in 2024) | € 6,255.00 | € 1,738.29 | € 6,073.97 | € 1,600.00 |
| BIK 2024 (proposal) | € 5,170.80 | € 1,738.29 | € 5,149.67 | € 1,600.00 |
| xDrive23i (150kW) | xDrive25e (180kW) | xDrive23d (155kW) | EV | |
| Monthly BIK 2023 | € 413.53 | € 144.86 | € 414.47 | € 128.33 |
| Monthly BIK 2024 | € 521.25 | € 144.86 | € 506.16 | € 133.33 |
| Monthly BIK 2024 (proposal) | € 430.90 | € 144.86 | € 429.14 | € 133.33 |
It is clear that the effect of the proposal is significant, with only 4% increase instead of 22% (diesel) or 26% (petrol).
Assuming a 50% tax rate for employees, the proposal of Van Peteghem saves employees €542 (petrol) or €462 (diesel) net, per year.
| Petrol | PHEV | Diesel | EV | |
| Relative change 2023 vs 2022 | 8% | 0% | 8% | 10% |
| Relative change 2024 vs 2023 | 26% | 0% | 22% | 4% |
| Relative change 2024 vs 2023 (proposal) | 4% | 0% | 4% | 4% |
Let employees make informed decisions
When choosing a new company car, it is important that employees are well-informed about the Benefit in Kind, at the year of ordering, but also in the rest of the contract years.
At Headlight, we have that kind of information via our lifecycle TCO calculations. Our TCO calculations calculate the benefit in kind for each contract year, and takes into account estimated future values for reference emissions. Our methods have been reviewed & approved by one KPMG.
