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New or used, you owe vehicle registration tax each time a passenger car or a minivan changes owners and the vehicle gets a new number plate. Each region calculates this registration tax differently: Flanders, Wallonia and Brussels all have their own systems in place.

Quite some time ago already, Flanders transitioned to a system that looks at the CO2 emissions, the fuel type, the emission standard and the vehicle’s age. In contrast to the old system (and to how it’s still done in Wallonia and Brussels), engine power and engine capacity no longer enter into the equation. Vehicle registration tax is calculated using a complex formula and varies between €45.35 and €11,336.47.

Emission-free cars (electric or hydrogen-powered) and plug-in hybrids with CO2 emissions lower than 50g/km do not pay vehicle registration tax in Flanders.

Wallonia and Brussels still use a table to determine the vehicle registration tax based on a vehicle’s cylinder capacity, expressed in fiscal HP, combined with the engine power in kilowatt (kW). If you’re registering a vehicle with CO2 emissions higher than 145g/km in Wallonia, you also need to pay a one-off environmental penalty between €100 to €2,500, unless the vehicle is powered by CNG.

The system is different for leasing companies. Whether they are based in Flanders, Brussels or Wallonia, the cars they register are always taxed according to the system in use in Brussels and Wallonia and without the environmental penalty for Wallonia.

Table: vehicle registration tax in Wallonia, Brussels and for leasing companies

*The highest value determines the rate

Table: Environmental penalty Wallonia for cars with CO2 emissions higher than 145g/km

In all regions, light commercial vehicles (vans, pick-up trucks, …) are not subject to vehicle registration tax and their vehicle tax is based on the vehicle’s maximum permissible mass. Maximum rates are much lower than those for passenger cars.

In principle, VAT on goods or services purchased for business purposes is fully recoverable (deductible) for whoever is liable to VAT (so not for liberal professions that are not liable to VAT). For light commercial vehicles (vans and pick-up trucks) that are used only for professional purposes, the VAT is indeed 100% deductible, but that changes from the moment the vehicle is also used privately. In the case of a passenger car, private use is always assumed and a reduced VAT deduction therefore applies.

In the case of passenger cars, no more than 50% of the VAT can be recovered, but in practice this only amounts to 35% for most persons liable to VAT. This is the fixed rate that is commonly used although it is also possible to determine the private-professional ratio on the basis of journals and to have the VAT deduction calculated on the basis thereof. The maximum rate is 50%.

On 1 September 2017, both the Euro 6c emission standard and WLTP were introduced. If your car meets the Euro 6c standard, that means it has been homologated according to the latest, stricter measurement method for consumption and emissions. Today, we are one step further: the current emission standard is called Euro 6d-Temp. Vehicles that meet this standard have a WLTP homologation and have also passed an emission test on the road called RDE (for Real Driving Emissions).

This means that their particulate matter and nitrogen oxide emissions (PM and NOx) are checked on the road and compared with the laboratory values measured under WLTP conditions. A certain margin is applied today because the measurement method on the road cannot always be performed in an identical way. This margin, the conformity factor, is equal to 2.1 for nitrogen oxides (NOx), meaning the emissions measured on the road may amount to 2.1 times the maximum value of the Euro 6 standard.

In a subsequent phase, this conformity factor will be reduced to 1.43. Vehicles that manage to keep their emissions within this range receive a Euro 6d homologation and are by definition much cleaner than Euro 6b and certainly Euro 5 vehicles. Indeed, today's diesels are in no way comparable to their predecessors in terms of emissions. Independent emission tests by Air Alliance and Auto Motor und Sport confirm this.

Table: emission standards introduction dates

The tax deductibility of a car is the percentage by which all vehicle-related costs can be deducted from the taxable amount of a company or a natural person. The non-deductible expenses are taxed like ordinary income.

Until 2019 companies could deduct the costs for their company cars for tax purposes on the basis of a deductibility table that set deductibility rates between 120% and 50%. For sole traders and liberal professions, a fixed percentage of 75% applied, except for interests, which were 100% deductible.

Both the table for companies and the 75% rule for sole traders were abolished on 1 January 2020. From that day onwards, the tax deductibility of passenger cars is determined according to a special formula.

• Deductibility = 120% - (0.5% x coefficient x CO2/km)
• For diesel, the coefficient is 1.
• For CNG, the coefficient is 0.90 (up to 11 fiscal HP).
• For all other fuels and engine types (including plug-in hybrids, also those on diesel), the coefficient is 0.95.
• From 141g emissions, the tax deduction is automatically equal to 50%, from 200g even only 40%.

For electric cars, the deductibility has been brought down from 120 to 100%. Plug-in hybrids are a special case: a distinction is made between 'fake' and 'real' based on two criteria.

For a plug-in hybrid to be considered 'real', it should not emit more than 50g CO2/km in the first place. In addition, the energy capacity of the propulsion battery must also be taken into consideration. The ratio between the battery power and the vehicle weight must be at least 0.45kWh per 100kg. If both conditions are met, the homologated CO2 emissions of the plug-in vehicle may be taken as a reference to calculate the deductibility.

However, if the energy capacity is lower and/or the emissions exceed 50g/km, the CO2 emissions of the corresponding 'normal' version with an internal combustion engine (on which the plug-in is based) must be used. If there is no 'normal' version, the CO2 of the plug-in must be multiplied by 2.5.

Would you like to find out what costs you can deduct of your current or future car? Get in touch with us without any obligation.

Companies that put a vehicle (car or light commercial vehicle) at the disposal of their staff which can also be used privately must pay a social security solidarity contribution for this private use. However, this contribution does not need to be paid by a company's senior management, nor does it apply to sole traders and liberal professions.

The solidarity contribution is calculated on the basis of the vehicle's CO2 emissions and fuel type. The minimum contribution is adjusted yearly and is set at €27.24 per month for 2020.

Petrol
If CO2 is known: [(CO2 emissions x €9) - 768]: 12 x 1.3078

Diesel
If CO2 is known: [(CO2 emissions x €9) - 600]: 12 x 1.3078

LPG/CNG
[(CO2 -emissions x €9) - 990] : 12 x 1.3078

Electric cars
€27.24 per month (= minimum contribution)

Would you like to find out what costs you can deduct for your current or future car? Get in touch with us without any obligation.

If a company manager puts a car at his disposal at the expense of the business and if they also use it for private trips, they enjoy a so-called Benefit In Kind. Taxes are due on this benefit since it is a kind of salary. Sole traders are not subject to this tax because they finance their car as a natural person.

The tax basis for BIK for passenger cars is determined by a formula that takes into account the vehicle's fiscal catalogue value (including all options), the CO2 emissions, the fuel type and the age of the car.

Commuting to and from the office is also considered private use. However, there is an exception: light commercial vehicles (vans or pick-up trucks). If you commute from your home to a construction site or workplace in an LCV, this counts as a business trip. However, as soon as you take your van or pick-up truck home at the weekend, it is private use. That means you will be taxed on this, which in this case is calculated on the actual benefit. Unlike for passenger cars, there is no formula to calculate this benefit. It is always an estimate based on the kilometres travelled and the value of the vehicle. It is up to the taxman to decide whether to accept this estimate or not.

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Calculate your vehicle tax for Flanders here.

Below is the table that is used in Wallonia, in Brussels and for leasing companies nationwide.

Until recently, a car's official fuel consumption and CO2 emission figures were based on the outdated NEDC (New European Driving Cycle), dating back to the 1980s. In recent decades, however, both technology and usage conditions evolved significantly, resulting in NEDC tests that yielded very unrealistic figures. That's why WLTP was introduced in 2017, an acronym that is short for Worldwide harmonised Light-duty vehicles Test Procedure. This new homologation method is still a laboratory test – after all, a road test involves too many variables – but the WLTP goes alongside higher average and maximum speeds, more realistic outdoor temperatures, faster accelerations, and a greater test distance.

WLTP also considers the impact on consumption and CO2 emissions of optional equipment such as larger tyres, a tow bar, a sliding sunroof, spoilers, additional seats, etc.

The advantage of WLTP is that the official consumption figures deviate less from reality. The disadvantage is that CO2 emissions are about 20 to 30% higher than under the NEDC method, which obviously has an impact on taxes. To compensate for this, the CO2 emissions measured according to WLTP until the end of 2020 are calculated back to a 'virtual' NEDC value, which then counts as a tax basis. This 'NEDC 2.0' value will continue to be used in Belgium until at least the end of 2020, both for the vehicle registration tax and the yearly vehicle tax as well as for the calculation of the tax deductibility, the Benefit In Kind and the solidarity contribution.

Thereafter, WLTP values should in principle take effect. Obviously, this has a major impact on car costs.

Would you like to find out how the WLTP will affect your car costs? Would you want to know how you can reduce or even neutralise this impact? Get in touch with us without any obligation.