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Tax news – company cars 2012

Foreword This brochure describes the current tax situation as regards company cars. By company cars, we mean passenger cars, dual purpose cars, minibuses and light goods vehicles. Definition of a light goods vehicle for tax purposes A ‘light goods vehicle’ is a vehicle designed and built for the transport of goods and which has an authorised mass not exceeding 3 500 kg1. In Belgium, these ‘LGVs’ are treated differently to passenger cars for tax purposes. The majority of vehicles that are types of monospace (MPV), off-road (SUV), or luxury 4x4 vehicles do not meet the tax definition of a light goods vehicle and are therefore taxed as passenger cars. Overview of current tax situation as regards company cars in 2012 Total Lease price of company car • Financial depreciation

Tax deduction (5) Non-recoverable VAT (4)

• Maintenance and repairs

Based on CO2 emissions: lease price + non-recoverable VAT

• Tyres • Breakdown assistance • Insurance • Vehicle registration tax (1) • Road tax (2) Fuel

75%

Interest

N/A

100%

CO2 solidarity contribution (3)

N/A

100%

Benefit of any kind (6)

1 For the definition of a light goods vehicle for tax purposes, please refer to Section 4:2 of the Wetboek van de met Inkomstenbelasting Gelijkgestelde Belasting (WIGB – Belgian Code for Taxes Equivalent to Income Tax).


Contents 1. Vehicle registration tax (BIV) ......................................................................................... 3 1.1. What? ..................................................................................................................... 3 1.2. Rates ....................................................................................................................... 3 2. Road tax .......................................................................................................................... 4 2.1. What? ..................................................................................................................... 4 2.2. Rates ....................................................................................................................... 5 3.

CO2 solidarity contribution ............................................................................................. 3.1. What? ..................................................................................................................... 3.2. Formulae for calculating the CO2 contribution ................................................... 3.3. Example ..................................................................................................................

6 6 6 6

4. VAT ................................................................................................................................... 6 5.

Tax deductibility of car expenses ................................................................................... 5.1. What? ..................................................................................................................... 5.2. Tax deductibility for corporation tax ................................................................... 5.3. What does the employer contribute? .................................................................. 5.4. Tax deductibility for personal income tax ...........................................................

7 7 7 8 8

6.

Benefit of any kind from use of company cars ............................................................. 8 6.1. What? ..................................................................................................................... 8 6.2. Formula for flat-rate benefit calculation ............................................................. 8 6.3. Actual valuation for light goods vehicles ............................................................ 9 6.4. Example ................................................................................................................. 10 6.5. How is the benefit of any kind imposed on the employee? .............................. 10

7. Tax benefit for energy-efficient vehicles ..................................................................... 10 7.1. Discount on the invoice for vehicles with low CO2 emissions ............................ 10 7.2. Tax reduction for electric vehicles ....................................................................... 11 8. Flat-rate kilometre allowance ....................................................................................... 11

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1. Vehicle registration tax (BIV) 1.1. What? The vehicle registration tax (BIV - Belasting op de Inverkeerstelling) is a one-off tax that is collected at the registration for use on public roads by one particular person of new and used passenger cars, dual-purpose vehicles, minibuses and motorcycles. The taxpayer is the natural person or legal entity identified on the registration document. Following the vehicle’s registration with the Vehicle Registration Department (Dienst Inschrijvingen Voertuigen - DIV) of the Flemish tax authorities, the taxpayer will automatically receive a tax assessment notice. On 1 March 2012, a new rate scale comes into force for vehicle registration tax in the Flemish Region. The new green registration tax means that the calculation is no longer based on the power of the engine. The new calculation is based on type of fuel, age and certain environmental features of the vehicle, e.g., CO2 emissions and euro norm of the engine). The new regulations provide for a transition period. The new scheme does not apply to companies with leasing activities that meet certain conditions. The old scheme still applies provisionally for leased vehicles. This means that leased company cars that are put on the road by the leasing company, must still have the registration tax calculated on the basis of • the power of the engine expressed in kilowatts (kW) or fiscal horsepower (hp), • the age of the vehicle, for which the date of first registration in Belgium or abroad is decisive.

1.2. Rates The tables below show the rates. However, if a leased vehicle is registered in the Flemish Region in the name of the lessee instead of the name of the lessor, the tables below do not apply and the new ‘green’ registration tax scheme applies. 1.2.1. Passenger cars, dual-purpose vehicles, and minibuses Vehicles using petrol or diesel. Age of the vehicle Cyl. cap. in l*

hp

kW

0.1 – 1.5 0 to 8

0 to 70

1.6 – 1.9 9 and 10

Up to 12 months

12 to 24 months

24 to 36 months

36 to 48 months

48 to 60 months

61.50

61.50

61.50

61.50

61.50

71 to 85

123.00

110.70

98.40

86.10

73.80

2.0 – 2.1 11

86 to 100

495.00

445.50

396.00

346.50

297.00

2.2 – 2.7 12 to 14

101 to 110

867.00

780.30

693.60

606.70

520.20

2.8 – 3.0 15

111 to 120

1 239.00

1 115.10

991.20

867.30

743.40

3.1 – 3.4 16 and 17 121 to 155

2 478.00

2 230.20

1 982.40

1 734.60

1 486.80

> 3.5

4 957.00

4 461.30

3 965.60

3 469.90

2 974.20

> 17

> 155

* Cylinder capacity in litres

Note: if the power of a given engine expressed in fiscal horsepower (hp) on one hand and kilowatts on the other, gives rise to the levying of a different amount of the registration tax, the highest amount of tax is payable.

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1.2.1. Light goods vehicle A ‘light goods vehicle’ is a vehicle designed and built for the transport of goods and which has an authorised mass not exceeding 3 500 kg. No vehicle registration tax is payable following the registration of vehicles that meet the tax definition of ‘light goods vehicle’. The conditions of the definition ‘light goods vehicle’ for tax purposes differ from the technical definition used by the Federal Public Service for Mobility and Transport. For example, in any event, a delivery van can only be registered as a light goods vehicle if the length of the cargo space amounts to at least half the length of the wheelbase. The majority of vehicles that are types of monospace (MPV), off-road (SUV), or luxury 4x4 vehicles are not deemed to be light goods vehicles for tax purposes and are therefore taxed normally as passenger cars.

2. Road tax 2.1. What? The road tax is an annual tax levied on motor vehicles designed for transportation of people or goods by road. For cars and related vehicles, the taxpayer is the natural person or legal entity identified on the vehicle’s registration certificate. The road tax is automatically payable with effect from the registration with the Vehicle Registration Department (Dienst Inschrijvingen Voertuigen - DIV). The amount of road tax is calculated on the basis of statutory scales set for each type of vehicle: passenger cars, trucks, motorcycles, tractors, etc. The rate for passenger cars depends on the power of the engine in hp for tax purposes.

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2.2. Rates 2.2.1. Passenger cars, rates valid from 1 July 2011 to 30 June 2012 Cylinder capacity (in litres)

Horsepower for tax purposes (hp)

Amount2 of the Road tax (including municipal surcharges)

0 to 0.7

4 and less

73.79 EUR

0.8 to 0.9

5

92.27 EUR

1 to 1.1

6

133.32 EUR

1.2 to 1.3

7

174.24 EUR

1.4 to 1.5

8

215.42 EUR

1.6 to 1.7

9

256.61 EUR

1.8 to 1.9

10

297.40 EUR

2.0 to 2.1

11

385.84 EUR

2.2 to 2.3

12

474.41 EUR

2.4 to 2.5

13

562.72 EUR

2.6 to 2.7

14

651.16 EUR

2.8 to 3

15

739.73 EUR

3.1 to 3.2

16

968.88 EUR

3.3 to 3.4

17

1 198.16 EUR

3.5 to 3.6

18

1 427.58 EUR

3.7 to 3.9

19

1 656.34 EUR

4 to 4.1

20

1 885.62 EUR

4.2 and higher

20 and higher

1 885.62 EUR + 102.83 EUR for each hp higher than 20

2.2.2. Light goods vehicles up to 3 500 kg Maximum authorised mass expressed in kg From

Annual tax amount3

Up to -

500

34.45 EUR

501

1 000

42.50 EUR

1 001

1 500

63.76 EUR

1 501

2 000

85.01 EUR

2 001

2 500

106.26 EUR

2 501

3 000

127.51 EUR

3 001

3 500

148.76 EUR

It also applies for the road tax that when the cargo space is less than 50% relative to the wheelbase, the vehicle will in any case be reclassified as a passenger car. Vehicles that run on LPG are subject to an additional road tax.

2 Indexed annually on 1 July. 3 Indexed annually on 1 July.

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3. CO2 solidarity contribution 3.1. What? Employers who make a vehicle available to an employee, which can be used for purposes other than business, must pay a solidarity contribution. This monthly contribution depends on the vehicle’s CO2 emissions and type of fuel, and is a fixed amount. The amount is also linked to the health index of September 2004 and is adjusted each year in January. The indexation coefficient is 1.1641 with effect from 1 January 2012. In addition to passenger cars, dual-purpose vehicles and minibuses, light goods vehicles are also subject to the CO2 solidarity contribution.

3.2. Formulae for calculating the CO2 contribution These formulae are valid with effect from 1 January 2012. Type of fuel

CO2 emissions4

Formula5

Diesel

Known

[((CO2 in g/km x 9.00 euro) – 600)/12] x 1.1641

Unknown

[((165 x 9.00 euro) – 600)/12] x 1.1641 = 85.85 euro

Known

[((CO2 in g/km x 9.00 euro) – 768)/12] x 1.1641

Unknown

[((182 x 9.00 euro) – 768)/12] x 1.1641 = 84.40 euro

Petrol LPG

[((CO2 in g/km x 9.00 euro) – 990)/12] x 1.1641

Electric

20.83 euro x 1.1641 = 24.25 euro

3.3. Example The monthly CO2 solidarity contribution for a diesel vehicle with CO2 emissions of 115 g/km amounts to: [((115 x 9.00 euro) – 600)/12] x 1.1641 = 42.20 euro

4. VAT The employer pays the leasing company an amount each month or quarter to lease the company car for its employee. This amount is subject to 21% VAT. Employers/lessees subject to VAT can partially reclaim the VAT paid. For passenger cars Old scheme Up until 1 January 2012, the private use of company property was subject to VAT through a VAT charge based on the benefit in kind as determined for income tax. However, a deductibility limit of 50% applied for the VAT on the leasing of company cars. New scheme Under the new scheme, the VAT levied on the benefit in kind for direct taxes has been completely abandoned. 4 The correct CO2 emissions are stated on the vehicle’s certificate of conformity. 5 The monthly contribution cannot amount to less than €24.25.

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Instead, the deduction of VAT on the lease payments is immediately limited based on the percentage of actual kilometres driven for private purposes (with a minimum of 50%) rather than the currently applicable fixed 50% deduction. There is currently considerable consultation between industry, the automotive industry federations, and the tax authorities in order to put these new rules into practice. For light goods vehicles Light goods vehicles are also subject to the new rules concerning the deduction limit for the professional use of business assets. However, there is no 50% maximum deduction. Since the new scheme has been suspended, 100% of the VAT can currently be recovered. Finally, it should be noted that the non-recoverable VAT can be included as an expense at the financial year-end according to the tax deductibility rates (see point 5). If you lease a company car from KBC Autolease, you will only pay VAT on the difference between the investment value and residual value. Conversely, if you buy your car, you must pay VAT on the full purchase price.

5. Tax deductibility of car expenses 5.1. What? Tax deductibility means that specific expenses can be partially or fully deducted from income.

5.2. Tax deductibility for corporation tax Since 1 April 20086 the tax deductibility of company cars for corporation tax has depended on their CO2 emissions. The following rates apply for income year 2012: Diesel What?

Petrol/LPG/ natural gas

Tax deduction

CO2 emissions in g/km

• Financial depreciation • Maintenance and repairs

Electric

0

120%

0 - 60

0 - 60

100%

61 - 105

61 - 105

90%

• Breakdown assistance

106 - 115

106 - 125

80%

• Insurance

116 - 145

126 - 155

75%

• Road tax

146 - 170

156 - 180

70%

• Vehicle registration tax

171 - 195

181 - 205

60%

> 1957

> 2058

50%

• Tyres

Interest

100%

Fuel

75%

6 Programme Act of 8 May 2007. 7 Deduction for diesel vehicles is limited to 50% if they have CO2 emissions of more than 195 g/km or if the Vehicle Registration Department has no available data concerning the CO2 emissions. 8 Deduction for petrol driven vehicles is limited to 50% if they have CO2 emissions of more than 205 g/km or if the Vehicle Registration Department has no available data concerning the CO2 emissions.

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The costs relating to light goods vehicles that are used for professional activities are not subject to a tax deduction limit. Parking and garage costs The CO2 deduction limit also applies to parking and garage expenses for company vehicles. The CO2 dependent deduction limit for corporation tax does not apply to costs for parking or garages occupied by vehicles belonging to staff members or to customer parking spaces. These costs are 100% deductible. Refunded parking costs The CO2 dependent deductibility limit also applies to refunds made to employees for parking costs incurred on their business trips.

5.3. What does the employer contribute? Part of the additional tax burden on company vehicles as a result of the new legislation9 is recovered from the employers. 17% of the taxable benefit that is calculated for employees using the set formula below (see point 6.2) is added to the disallowed expenses (i.e. increase in non-deductible costs for the employer and thus an increase in the taxable result) and is, therefore, subject to corporation tax. • The effective cost is equal to the taxable benefit x 17% x 33.99% (at the standard rate of corporation tax). • The additional disallowed expenses are at least 204 euros (i.e. 17% of €1 200) and this results in an additional cost of at least 69.34 euros (i.e. 204 euros x 33.99%).

5.4. Tax deductibility for personal income tax For self-employed people, members of the liberal professions, and employees who are taxed through personal income tax, the tax deductibility of car expenses and fuel are equal to 75% regardless of the CO2 emissions.

6. Benefit of any kind from use of company cars 6.1. What? Employees and business managers whose employer or company has provided them with a company car (passenger car dual purpose vehicle, or minibus) free of charge, and who are also authorised to use this vehicle for personal purposes, will be taxed on a flat-rate benefit of any kind.

6.2. Formula for flat-rate benefit calculation The following flat-rate calculation applies with effect from 1 January 2012. Benefit of any kind = vehicle list price x percentage based on CO2 emissions x 6/7 x vehicle age percentage

9 Act of 28 December 2011

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• What does the vehicle ‘list price’ mean? – List price of the vehicle in new condition when sold to a private individual – Including options – Including actual VAT paid – Without taking into account any discount, reduction, rebate or refund. • Percentage based on the CO2 emissions of the company car – Standard percentage = 5.5% n for a diesel vehicle with CO emissions of 95 g/km 2 n for a petrol vehicle with CO emissions of 115 g/km 2 – + 0.1% per 1 g/km more up to a maximum of 18% OR – - 0.1% per 1 g/km less with a minimum of 4% • Vehicle age percentage10 Period elapsed since the vehicle’s first registration*

Percentage of the list price used for calculating the benefit of any kind

From 0 to 12 months

100%

From 13 to 24 months

94%

From 25 to 36 months

88%

From 37 to 48 months

82%

From 49 to 60 months

76%

From 61 months

70%

* A month already started counts as a complete month.

• Additional limit: the benefit of any kind for the 2012 income year (2013 tax assessment year), will amount to at least 1 200 euros per year, indexed for the 2012 income year. • If no data are available for the CO2 emissions of a vehicle, the following fixed values must be used: – 205 g/km for petrol, LPG, or natural gas vehicles – 195 g/km for diesel vehicles.

6.3. Actual valuation for light goods vehicles For vehicles that qualify under the tax definition of light goods vehicles11, the benefit of any kind should not be calculated on the flat-rate valuation, but on the actual value of the benefit. In other words, the taxable benefit of any kind must be determined on the basis of the actual number of kilometres driven for private purposes and the actual costs with respect to the beneficiary. The tax authorities state, without further explanation, that the cost per kilometre as published by various car magazines can form a useful element for determining the actual value of the benefit. Subsequently, the actual number of kilometres driven for private purposes, including commuting, has to be multiplied by the price per kilometre.

10 According to the frequently asked questions (FAQ) of the tax authorities, these age percentages for the calculation of the payroll withholding taxes will only be applied to benefits that are enjoyed from 1 May 2012 onwards. 11 For the full definition of a light goods vehicle for tax purposes, please refer to Section 4:2 of the Wetboek van de met Inkomstenbelasting Gelijkgestelde Belasting (WIGB – Belgian Code for Taxes Equivalent to Income Tax).

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6.4. Example • Vehicle list price, excluding VAT • Price of options, excluding VAT • Discount • CO2 emissions • Date first registered • Diesel vehicle

= € 22 000 = € 2 000 = € 5 000 = 115 g/km = 15 March 2011

• List price = €27 990 Amount List price excluding VAT Optons excluding VAT

List price

22 000

List price excluding VAT 22 000

2 000

Optons excluding VAT

2 000 3 990

Discount

- 5 000

Actual VAT payed

Total price excluding VAT

19 000

Total price

Actual VAT payed

27 990

3 990

• CO2 emissions percentage = 5.5% + (115 – 95) x 0.1% = 7.5% • Vehicle age percentage12 – January and February = 100% Ú 2 months at 100% – From March onwards = 94% Ú 10 months at 94% The benefit of any kind for 2012 is equal to: [(27 990 euro x 7.5% x 6/7 x 100%) x 2/12] + [(27 990 euro x 7.5% x 6/7 x 94%) x 10/12] = 1 709.39 euro

6.5. How is the benefit of any kind imposed on the employee? The taxable benefit in kind is added to the employee’s taxable pay. An employee who receives this benefit must pay taxes on it. It will be taken out in the payroll accounting by means of an increased deduction of withholding tax from the employee’s salary.

7. Tax benefit for energy-efficient vehicles 7.1. Discount on the invoice for vehicles with low CO2 emissions The federal ‘invoice discount’ for the purchase of vehicles with low CO2 emissions was abolished with effect from 1 January 2012. This invoice discount – which had been introduced with effect from 1 2007 – only applied for natural persons, including selfemployed people and members of the liberal professions. However, the Walloon Region still has a tax incentive that uses a premium (an ’eco bonus’) to promote the purchase of new or used cars with low CO2 emissions. This tax incentive only applies only to private individuals.

12 According to the frequently asked questions (FAQ) of the tax authorities, these age percentages for the calculation of the payroll withholding taxes will only be applied to benefits that are enjoyed from 1 May 2012 onwards. For vehicles older than one year, this will mean that the taxable benefit and the corresponding payroll withholding taxes during the first four months of 2012 will be too high because the vehicle age percentage cannot be adjusted. Subsequently the taxable benefit of the first four months will have to be adjusted so that the correct benefit is applied.

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7.2. Tax reduction for electric vehicles 7.2.1. For companies Electric vehicles registered by a company enjoy tax relief of 120% (see point 5.2). 7.2.2. For self-employed people and members of the liberal professions Self-employed people and members of the liberal professions who are taxed through personal income tax can enjoy tax relief for the purchase of a new electric vehicle. The tax reduction is 30% of the purchase price of the electric vehicle, with a maximum reduction of € 9 510.00 in 2012.

8. Flat-rate kilometre allowance Employees who make business trips with their own vehicle can be reimbursed for this in one of two ways. The employer opts either to reimburse the actual costs, or to pay the flat-rate kilometre allowance. The majority of employers prefer to use a flat-rate kilometre allowance because it’s simpler as regards administrative. For the period from 1 July 2011 to 30 June 2012 inclusive, this flat-rate allowance amounts to 0.3352 euros per kilometre. The repayment is completely exempt from tax. The employer can recognise this cost as deductible car expenses. The tax authorities estimate the cost of fuel consumption (in the part of the flat-rate kilometre allowance) at 30% and the other vehicle costs at 70%. • Fuel costs are 75% deductible; • The other vehicle costs are tax deductible according to the CO2 emissions (see 5.2). However, the rule of the flat-rate kilometre allowance only applies if the number of kilometres driven on behalf of the employer is not abnormally high. If they amount to more than 24 000 kilometres a year, the authorities can conduct an audit and the taxpayer will have to provide additional evidence. If the reimbursements exceed the flat rate of € 0.3352/km, in principle this is deemed to be pay and the employee will be subject to tax and social security contributions on it. Only if the evidence is produced to demonstrate that the reimbursement corresponds to the actual costs, will this be accepted by the tax administration and not be taxed.

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In samenwerking met

Disclaimer This document has been drafted in general terms and cannot therefore be used as a guideline for specific situations. As the answers provided in this document in response to questions are based on a general understanding of the facts and circumstances of the possible cases, they cannot serve as a substitute for a specific recommendation adapted to the facts of each individual case. The application of the principles set out in this document depends on the specific circumstances of each factual situation. We therefore recommend seeking professional advice before deciding for or against any specific course of action based on the contents of this document. Deloitte will be pleased to further advise readers on how the principles cited in this document must be adapted to their specific situation. In the absence of such specific advice, Deloitte accepts no responsibility or liability towards the recipient or any other party having access to this document. About Deloitte Deloitte refers to one or more entities of Deloitte Touche Tohmatsu Limited (DTTL), a company established under the laws of the United Kingdom (‘private company limited by guarantee’), and to its network of affiliates, which are all legally independent and autonomous entities. Got to www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its affiliates.

KBC Autolease NV Prof. R. Van Overstraetenplein 5 3000 Leuven phone 016 88 16 00 fax 016 88 16 50 e-mail autolease@kbcautolease.be www.kbcautolease.be Member of the KBC group

kbc autolease tax brochure company cars  

kbc autolease tax brochure company cars

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