In the context of making mobility more environmentally friendly, the Law of 25 November 2021 organizing the fiscal and social greening of mobility, has introduced several tax measures, including changes to the deduction of business expenses relating to the use of company cars and the introduction of an increased deduction for the installation of electric charging points.
The tax authorities have recently updated part of the FAQ initially published, providing explanations on the measures included in the 2021 Law (i.e. circular letter n° 2021/C/115 of 22 December 2021 on the fiscal greening of mobility), by means of two new circular letters containing FAQs, namely circular letter n° 2023/C/99 of 12 December 2023 on the deduction of car expenses and circular letter n° 2023/C/97 of 6 December 2023 on charging stations. These FAQs provide additional explanations of certain regulatory ambiguities, a brief overview of which is given below.
1. Deduction of car expenses
The circular letter n° 2023/C/99 of 12 December 2023 concerns the deduction of professional expenses related to the use of cars, dual-purpose vehicules, and certain minibuses.
As part of the aforementioned Law of 2021, the legislature has gradually reduced the deduction of expenses relating to vehicles with CO2 emissions (40% to 100% depending on CO2 emissions). For cars with CO2 emissions purchased, leased, or rented from 1 July 2023 until 31 December 2025, the deductibility of expenses will be capped at 75% from 2025, 50% in 2026 and 25% in 2027. These expenses will no longer be deductible from 2028. Business expenses relating to vehicles (with CO2 emissions) purchased, leased, or rented from 1 January 2026 will no longer be deductible.
The new version of the FAQ also points out that for CO2 emission-free vehicles purchased, leased, or rented from 1 January 2026, the related business expenses will continue to be 100% deductible, although this percentage will decrease progressively depending on the year in which the vehicle was purchased (or leased or rented).
In addition, the tax authorities have clarified a number of other points in the updated FAQ, the most important of which are listed below.
- Absence of limitation: the FAQ repeats that for certain categories of vehicles and expenses, no limitation on deduction applies, such as for "vehicles that are used exclusively for a taxi service or chauffeur-driven rentals and that are exempted from road tax ". Unlike the old FAQ, the new FAQ no longer contains a time restriction in this respect.
- Purchase, leasing, or rental date of a vehicle: the FAQ clarifies that any change to the original terms of a leasing or rental contract generates a new contract date, unless the contract already provided for the possibility of amending it with all the terms and conditions originally laid down. This means, for example, that where a leasing contract is extended or the purchase option is exercised, and the original contract does not provide for an extension/purchase option or does not provide for all the related terms and conditions, this extension/exercise will be treated as a new contract, so that this new date must be taken into account when determining the deduction.
- Flat-rate mileage allowance: this allowance paid by the employer to the employee for the professional use of their own plug-in hybrid car purchased between 1 January 2023 and 31 December 2025, can be considered as covering "fuel expenses (petrol or diesel)" for 30% (maximum deduction of 50%) and "other expenses (including electricity costs)" for 70% (deduction from 50% to 100%, depending on CO2 emissions).
2. Increased deduction for electric charging stations
The legislature is also encouraging companies to invest in charging stations by offering an increased deduction of depreciations relating to investments in fixed charging stations for electric vehicles, which are obtained or established in a new state, publicly accessible, intelligent, and depreciated on a straight-line basis over at least five taxable periods. For depreciations related to such investments made during the period from 1 April 2023 to 31 August 2024, the deduction amounts to 150%.
The FAQ attached to circular letter n° 2023/C/97 of 6 December 2023 regarding electric charging stations provides details on the following aspects:
- Ancillary expenses: the FAQ now includes "expenditure relating to the reinforcement of the electrical installation (e.g. from one to three phases)" among the examples of "ancillary costs" that can benefit from the increased deduction, provided that they have been incurred with a view to installing a charging point.
- Depreciation period: the FAQ emphasises that the normal depreciation period for a charging station must be estimated on the basis of its economic life. Although the normal depreciation period is initially set at ten years, the taxpayer can demonstrate the existence of special circumstances justifying a shorter depreciation period.
- Green electricity: the increased deduction does not require the electricity used to be exclusively green.
- Discount on purchase: the FAQ specifies that if the taxpayer receives a discount or rebate on the purchase of the electric charging station, this must be deducted from the amount to be depreciated and, consequently, from the amount eligible for the increased deduction.
- Subscription charges: subscription charges relating to the operation of a charging station are not taken into account for the increased deduction, as they are deemed professional expenses (and therefore deductible to the extent of the professional portion) and not depreciable fixed assets.
- Location of the installation: the charging station's location is generally free of choice, as long as the legal requirements are met.
- Electric trucks and vans: charging stations for electric trucks or vans are also eligible for the increased deduction, provided that all legal conditions are met.
In case of questions, please do not hesitate to reach out to your regular contact within the Fieldfisher Belgium tax team.
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