It is a typically Belgian phenomenon that employees receive a company car from their employer which they can use for free for private purposes. Very often, the employees receive a “free” fuel card in combination with the company car.
How is the employee taxed for the private use of the company car?
When a company car can be used for private reasons by the employee, this creates a taxable benefit for the employee.
The taxable value of the benefit for a company car is determined on a “lump sum” yearly basis according to a specific formula determined by the Belgian tax authorities, regardless of the actual numbers of kilometers of private use.
The employee pays only personal income tax on this lump sum taxable benefit in kind. While the benefit in kind company car is exempt from Belgian employee social security contributions, there is specific “CO2-contribution” due by the employer.
Does the granting of the fuel card on top of the company car create an additional taxable benefit in kind for the employee?
No, there is only one taxable benefit in kind, namely the lump sum calculated benefit which is applicable for the company car itself. This means that no additional or separate benefit in kind should be calculated and that the granting of the fuel card falls under the benefit ‘car’. This is of course a significant advantage for the employee.
What if only a fuel card is granted?
The benefits of a fuel card diminish greatly when the fuel card is granted to an employee without a company car.
In this case, a distinction will need to be made between the type of travel:
- Professional travel: exempt from taxes and social security contributions.
- Commuting:
- Taxes: exemption of 490 EUR/year (amount for 2024), surplus is taxable benefit
- Social security contributions: exempt up to 0.4269 EUR/km so in practice almost always exempt.
- Private travel: benefit subject to taxes and social security contributions.
The employee will therefore be taxed (partially) on actual value of the benefit. In practice, usually a percentage will be applied for the part which should be considered as private travel/commuting/professional travel. Determining that percentage is not easy but it can either be done based on actual kilometers or based on an estimate made by employer and employee (ideally only done after a time of tracking the actual use).
Because of this, a fuel card is rarely given to employees who do not have a company car. If an employee uses his own car for professional purposes, the employer may grant a mileage allowance (maximum amount currently 0.4269 EUR/km)
What if my employee drives an electrical/hybrid car and I grant them a charging pass?
The same rules apply to the charging pass as to the fuel card. No additional benefit in kind is due. Kindly note that different rules may apply for alternative methods of charging (smart cable, charging stations etc.)
For more information, do not hesitate to reach out to Pro-Pay via the contact sheet.
