Charging stations: first amendment to new legislation

A lot will change in the coming years with regard to the deductibility of professional car expenses. Cars that run on fossil fuels lose the deduction as business expenses. Electric cars remain tax deductible. To encourage the switch, the legislator works with carrot and stick, but an imminent change in the law makes the carrot a bit smaller.

Deduction

The deduction for company cars (salary cars, but also other passenger vehicles) will be thoroughly reformed in the coming years. For fossil fuel passenger cars, the deduction will be abolished as from 2026. Starting in 2026, only 100% electric cars will still enjoy some deduction, but this will also slowly decrease over the years to end up (for the time being?) at 67,5% in 2032.

For fossil fuel passenger vehicles purchased in the period before 2026, a transitional arrangement applies, which means that the deduction will be zero as from 2028.

There is a transitional arrangement that differs slightly for hybrid passenger cars, but the deduction will also be zero for hybrid cars purchased from 2026.

These rules do not apply to motorcycles or light trucks ('vans'), because the range of electric vehicles in this area is still too limited.

Charging stations

An electric car is more expensive to purchase than a classic diesel or petrol vehicle. You also need a charging station for an electric car. Electric cars can also be charged at a conventional socket, but the power of such a socket is often too low to recharge the vehicle within an acceptable time (7 to 8 hours per 100 km). A separate installation is therefore recommended.

In order to make the installation of the charging stations feasible, the legislator provided in the law in which it abolished the deduction as professional expenses that private individuals would receive a tax reduction for the installation of a charging station.

For professionally used charging stations (charging stations that you make available to your staff, to your customers or to third parties), this law provides for an increased deduction.

Private individuals (owners or tenants) who install a charging station between 1 September 2021 and 31 August 2024 will receive a tax reduction. If the charging station is installed between 1 September 2021 and 31 December 2022, the tax reduction is 45%. As from 1 January 2023 to 31 December 2023, the tax reduction amounts to only 30% and finally to 15% in case of installation between 1 January 2024 and 31 August 2024. The amount of the tax reduction is limited to 1.500 per charging station and per taxpayer (amount not indexed).

Companies – legal bodies and the self-employed or a liberal professionals – do not receive a tax reduction, but an increased expense deduction. That deduction is 200% for purchases between 1 September 2021 and 31 December 2022, and 150% for purchases between 1 January 2023 and 31 August 2024.

Important condition: the charging station must be freely accessible to everyone!

Investment deduction

In response to a parliamentary question at the end of 2021, the minister stated that this increased expense deduction can in principle be combined with the investment deduction. This will be 25% until the end of 2022 (in the context of the recovery after the corona crisis), but after 2022, the increased investment deduction for so-called environmentally-friendly investments can also be used for this type of investment.

That in itself was surprising, because the investment deduction is in principle only possible if the use of the investment is not transferred to third parties and if the use of the investment is 100% professional. But one of the conditions for the increased expense deduction is that the charging station must be publicly accessible. The minister did not find this a problem in his answer, and he confirmed that the investment deduction can be applied to charging stations.

New draft legislation

In the course of April, however, the Council of Ministers approved a new draft law that would now explicitly exclude charging stations from the investment deduction if they entitle them to an increased expense deduction. Companies that install a charging station exclusively for their own vehicles would retain the right to investment deduction. But if the increased deduction applies, no investment deduction is possible.

It is not clear whether an investment deduction is possible if the charging station can also be used by the staff, either for their private car or for the salary car. This will have to be apparent from the final text.

Smaller carrot, but lasting a bit longer

The draft law, which had not yet been submitted to Parliament when this article was drafted, also provides that the deduction percentage of 200% would not apply until the end of 2022, but until 31 March 2023. Apparently, many installers experience delivery problems, so that many entrepreneurs were told in April 2022 that an installation in 2022 would no longer be possible.

An extension of the total duration – so until after 31 August 31 2024 – is not being discussed for the time being.

But as this law also makes clear, a term of 2 years in tax legislation is an eternity and a lot can change in the meantime!