In this guide I give you a clear overview of the key principles of car taxation for freelancers and SMEs in Belgium. No legal jargon, but practical tips you can actually use.
What do we mean by “car taxation”?
Car taxation includes all the tax rules around using a car in your business: which expenses you may deduct, how the deduction is calculated and how private use is treated.
- ✔ car expenses are usually only partially deductible
- ✔ the deduction often depends on CO₂ emissions
- ✔ private use may result in a taxable benefit in kind
Which car expenses are (partly) deductible?
In practice, the following expenses can usually be treated as business costs:
- purchase or leasing of the vehicle
- fuel or electricity
- maintenance, repairs and tyres
- insurance, road tax and inspections
- parking, tolls and sometimes garage costs
The key condition: the expenses must relate to your professional activity and you must be able to prove them with invoices or receipts.
Deduction percentage: it depends on the car
For passenger cars, the deduction is usually limited. The percentage depends, among other things, on CO₂ emissions and the engine type.
In Belgium, the deduction for many cars is calculated using the so-called “gram formula”:
Deduction percentage = 120% − (0.5% × coefficient × grams of CO₂ per km)
- coefficient for diesel: 1.00
- coefficient for petrol and hybrid: 0.95
- coefficient for certain CNG vehicles: 0.90
The higher the emissions, the lower the deduction. Minimum and maximum limits and transitional rules may apply. For vans and certain light commercial vehicles, different rules may apply. It is therefore wise to check the tax impact before buying a car.
The law is changing: for new cars with CO₂ emissions purchased in the coming years, the deduction will gradually decrease, while zero-emission cars remain much more favourable.
Electric cars and charging stations
Electric cars are often treated more favourably. In some cases their costs are deductible up to a very high percentage, sometimes even 100%, depending on the year of purchase and transitional rules.
Investments in charging infrastructure may also qualify for increased deductions or other incentives.
Keep in mind: rules continue to evolve toward emission-free mobility. What is attractive today may look different in a few years.
Private use: benefit in kind (BIK)
If you also use the company car privately, a so-called benefit in kind arises. This is a notional amount treated as taxable income.
The calculation is based on statutory formulas and takes into account the catalogue value, CO₂ emissions and age of the vehicle.
Example: if the formula results in a benefit in kind of EUR 2,000 per year and your marginal tax rate is 40%, you pay about EUR 800 extra income tax (plus possibly social contributions).
In short: a company car is rarely “free”. A good simulation up front helps avoid unpleasant surprises.
My advice
Car taxation is an important part of your overall tax planning. The choice of vehicle and financing (purchase, lease, mobility budget) can make a big difference long term.
During a meeting, we review together:
- which type of car fits your activity
- expected deductibility now and in the future
- impact on your personal tax via benefit in kind
- whether alternatives such as a mobility budget make sense
This way you choose a solution that fits your situation, your budget and your plans.