Belgium's Company Car Tax Reform Plans Criticized

by Ulrika Lomas, Tax-News.com, Brussels

13 December 2011

Government plans to reform the existing tax regime pertaining to company cars in Belgium, agreed within the framework of intense negotiations on the country’s 2012 budget, are expected to significantly increase the tax burden on individuals.

At the beginning of the month, negotiators in Belgium led by Elio Di Rupo, united on plans to link the taxable benefit in kind with the car's list price and to the level of carbon dioxide emissions.

Expected to yield around EUR200m (USD265m) for the state, the measure is intended to target the largest company vehicles and the additional tax burden is intended to be shared equally between users and companies.

However, according to tax experts, employers and leasing professionals in Belgium, between 90% and 95% of the additional burden will in reality be borne by the individual.

According to Stéphane Verwilghen, president of the car rental association Renta, on average the share paid by the user will rise from 30% to 35%.

Opponents of government plans to amend the tax regime argue that company cars play a significant role in the overall salary package of employees, and that the proposals will merely serve to increase the tax burden on individual beneficiaries and mean that company cars will no longer be an attractive proposal for professionals.

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