Sébastien Mathieu | 20 January 2022
By 2026, the Belgian government decided that only company cars that do not emit greenhouse gases, such as electric cars, will be tax deductible. But what does this mean for your employees and how do you start this transition?
Since 2020, our dedicated fleet team has been researching all electric vehicles on the automobile market. But knowing which vehicles exist isn’t enough for a smooth transition. Your fleet team also needs to be aware of what the current infrastructure looks like and how it will change in the upcoming years.
“We see that many of our colleagues are interested in leasing an electric vehicle but are reluctant at the same time because they can’t charge it at home or think they won’t be able to do long trips by car. Therefore, we have not only researched the best electric vehicles per pay grade, but we also researched all aspects of buying an electric vehicle and organised several internal meetings to inform our colleagues. Information is truly key for a smooth transition.”Sébastien Mathieu, project manager & fleet at ::projective
What changes were made by the government?
In recent years, the Belgian government has already made some adjustments so that company cars with the lowest CO² emissions are favoured fiscally. The lower the CO² emission of the car, the greater the tax deductibility for the employer, and the lower the Benefit in Kind (BIK) on the employee’s payslip.
On top of that, the way in which the CO² emissions are determined have also changed. The calculation method switched from NEDC to NEDC2.0 to WLTP. This gives a more realistic view of the emissions, which means that most cars’ CO² increased, resulting in a higher BIK and decrease in tax deductibility. This has as a result that company cars with combustion engines are more expensive for both employer and employee, which is an extra incentive for all to choose for a greener option.
And what changed at ::projective?
Our previous car budgets mainly looked at the basic rental price of the car. This meant that the tax deductibility linked to the CO² emissions was not considered in the available budget. In addition, the purchase price of an electric car was much higher than a traditional car, making it impossible to fit into the budget of our employees.
Therefore, at the start of 2020, we switched from the traditional budget determination based solely on rental price to a Total Cost of Ownership (TCO) approach. The TCO budget looks at the monthly total cost of the car. This means that in addition to the rental price, the actual tax deductibility, (CO²) taxes, average energy/fuel consumption, etc are also considered. In this way, the real cost of the company car throughout its leasing life is mapped and we, as a company, get a more realistic view of the total cost per month.
How do our ::projectivers choose their cars?
Today, our employees can still choose between an electric or fuel-based vehicle if it fits within the TCO budget. The lease price of cars with higher CO² emissions and/or fuel/energy consumption will be relatively more expensive than energy-efficient cars with lower CO² emissions even though the purchase price of these types of vehicles is higher. This is due to their zero C02 emission which currently enjoys a high tax deductibility which compensates the higher purchase price.
Today, more and more manufacturers are introducing new or electric versions of their cars, which is great, but we are aware that today’s electric vehicle offer is still very limited compared to vehicles with combustion engines. Take a big family car for example. Not many exist in an electric version and if you find one, they’re often very expensive. That is why leasing a combustion engine car is still an option, but we do aim to have a majority of electric vehicles by 2027 and a fully green fleet by 2030.
Why choose an electric vehicle?
The evolution is clearly visible. At all our leasing companies we see that the leasing prices for electric vehicles are getting cheaper, whilst the leasing prices for fuel cars are rising. This is linked to the expected resale value of the car at the end of the contract after approximately 4 to 5 years. An electric vehicle today is simply worth more than a fuelled based vehicle.
The main benefit to the employee is that the BIK for an electric car is much lower than for a fuel car. The lower the BIK, the lower the tax contribution on the payslip. Other than that, there are no financial differences for the employee. Today, our most recent company car orders are 50% electric.
Then of course, there is the environmental aspect. An electric vehicle does not emit local CO², which benefits air quality and helps tackle climate change. And if the car is also charged with green electricity, you’re definitely on the right track. Besides, independence from fossil fuels has a positive influence on geopolitics and can lead to fewer conflicts in areas with a large natural supply of fossil fuels. Only benefits if you ask us.
What about electric bikes?
Another thing we offer our colleagues is to lease (electric) bicycle. Our colleagues can exchange a portion of their lease car budget for a lease bicycle. With this option we’d like to nudge our employees to take the car less frequently and/or even permanently come to work by bike.
“I love riding a bike. As I live in the city, it is a convenient way to get around and it is almost as fast or even faster than taking the car. And I don’t have parking struggles or costs. The other advantage of leasing a company bike is that I’m able to get a very performing and high-quality bike at a reduced cost. I do still have a company car but as I ordered below my budget, there was enough left to also lease the bike.”
Xavier Angenot, Transformation Lead & human system coach & facilitator at ::projective
Electric vehicle charging options at home and on the road
When opting for an electric vehicle, our colleagues have the possibility of having a charging station installed at home. This is also included in their lease contract. In addition, each electric car is supplied with a charging card so that it can be charged at public charging points, somewhat similar to the classic fuel card.
Of course, there will be many employees who do not have the possibility to install a charging station at home, e.g. in case of a row house, rented accommodation, apartment, etc. In this case they can use a public charging point close to home with the charging card, which some colleagues already do.
Today, we’re still experiencing the lack of public charging points as a big bottleneck in the electric car evolution. In the city centres and paid parkings, you can already find several charging points but in more rural areas this is still a working point. It is in the government’s plans to quickly install more loading stations all over the country, but if you’d need one now, you can put in a request to Fluvius or your city for the installation.
What will the future bring?
First of all, the most interesting development in the short and medium term is the strong increase in the supply of electric vehicles. Almost all major brands now have an electric vehicle offering with several models and this offering will continue to grow in the upcoming years. Today, we can already offer 25 electric vehicle models through our lease partners, and an electric vehicle can be chosen in every salary band. In addition, the industry is also very much focusing on increasing the driving range of the electric vehicles and the development of more efficient batteries, as well as a network of fast chargers to make longer journeys easier.
Finally, the Belgian government has announced that starting in 2023 the fiscal deductibility of non-zero CO² cars will begin to decrease drastically. Which means that from that point on, the new company car will most probably always be an electric vehicle.
Are you also experiencing the same transition in your company and would like to share your thoughts? We’re always up for a good chat. You can always reach out to Sébastien Mathieu, Willem Dubois and Jeff Van Calster. 🚘