Calculation benefits in kind for company cars in 2020
When an employer provides an employee or a director with a company car, the employee/director will be taxed on the benefit in kind. The calculation of this benefit in kind depends a.o. of the CO2-emission of the car compared to the 'average emission of the Belgian car fleet'. The average emission increased a little bit in 2019, which is good news for those with a company car.
Benefit in kind
The calculation of the benefit in kind linked to a company car is the following: list price x CO2-percentage x 6/7 x age percentage
The list price is the price which has to be paid for the vehicle, including VAT and options, but without taking any discount into consideration. The list price does not change afterwards, but the value decrease based on the age of the vehicle is considered. The first year the age percentage is 100%. Every year 6% is deducted, but cannot be lower than 70%.
Subsequently the formula uses the CO2-percentage (CO2-coëfficient). How is this percentage calculated?
The standard percentage is 5,5%. But it should be corrected.
The first step in the 'correction' is the comparison of the CO2-emission of your vehicle with the average emission of the Belgian car fleet during the 12 months before October of the year before the taxable period. For the 2020 income this is the average emission of October 2018 until September 2019.
This average emission is published annually (during December). For income year 2020 the average emission amounts to:
111 g/km for vehicles with a petrol, LPG or natural gas engine; and
91 g/km for vehicles with a diesel engine.
This is an increase compared to last year where the average amounts were respectively 107 g/km and 88 g/km.
Step 2 in the calculation of the CO2-percentage is the transfer of the difference between your car's emission and the average emission, in a 'correction' of the standard C02-percentage of 5,5%. For every gram CO2 that your vehicle is under or above average, we decrease or increase the percentage with 0,1%. The percentage should be between 4% and 18%.
Does your diesel car has a CO2-emission of 100, then the CO2-percentage equals 5,5 + (0,1*(100-91)). So 5,5 + 0,9: the CO2-percentage is 6,4%.
More CO2 is good for your wallet
It sounds weird nowadays, but when the average CO2-emission increases, company cars become cheaper.
Imagine that you obtain a diesel company car in 2019. The car has a CO2-emission of 100. The benefit in kind is 40.000 euro x 6/7 x (age) x CO2-percentage = 34.285, 71 euro x CO2-percentage:
In 2019 the CO2-percentage equals ((100-88) x 0,1) + 5,5% = 6,7%. The benefit in kind is 2.297,14 annually.
In 2020 the CO2-percentage is ((100-91) x 0,1) + 5,5% = 6,4% which gives a taxable benefit in kind of 2.194,29 euro. We further multiply with 94% as the age factor: 2.062,63 euro.
It is expected that in the coming years the average CO2-emmissions will again decrease, since employers increasingly choose for ecofriendly and electric cars.
Minimum benefit in kind
After all, the law foresees that the annual taxable benefit in kind for a company car cannot be lower than 1.360 euro (for income year 2020).