Taxation & company cars in Belgium: Getting figures right

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1 Taxation & company cars in Belgium: Getting figures right

2 Belgian Car Parc and New Car Market: what are we talking about? Car park by owner type New car market by owner type 2014 BELGIUM New Company cars - Lease % New Company cars - No Lease % New cars of Self-Employed % New Company Cars All % New Private Cars % Total % 4,4 mln or 80% of car parc are private cars 50% of new car market are private cars 1,1 mln or 20% of car parc are company cars 50% of new car market are company cars 2

3 Company car parc: better environmental performance than private car parc since 2013 Car Parc CO2- emissions Car Parc: age and emissions Average CO2 emissions of company car parc are below private car parc and decrease faster 75% of company cars are less than 4 years old and thus meet Euro 5 or 6 standards, 70% of private cars 3are over 4 years old

4 New car market: since 2012, average CO2 (g/km) of new company cars drop faster than CO2 of new private cars Green car taxation has helped to reduce CO2 emissions and meet EU 2015 CO2-target

5 Composition of of the company car parc by owner type and with / without private use Composition of the car parc in Belgium Personal cars 80% Business cars 20% of which: Cars of Self-employed Cars of Companies % % of which: Cars without private use (=25%) Cars with allowed private use (=75%) % Remarks Pool cars, Service cars, promo & demo cars, % Estimation (2015) of which: Cars subject to CO2- solidarity contribution % Put at the disposal of employees by the employer. Source: ONSS/RSZ With , the so-called salary cars represent 8% of Belgian car parc The tax base of the company car park with allowed private use is too small for being of significant weight and leverage in a tax shift from labor towards consumption/green taxes

6 Company cars at what cost / benefit to state and society? Some considerations Tax treatment of company cars is more attractive than that of salaries, but compensate high labor costs, especially in Belgium: Company car is only 1 kind of frinch benefit out of more than 50 schemes in place in Belgium Professional use is less attractive in Belgium compared to neighboring countries: Deductibility VAT: limited tot 50% in Belgium, even if professional use share > 50% Commuting in Belgium is considered as personal travel, not work-related (100% personal in Belgium, 100% work-related in Netherlands, 50%/50% in Germany) Company cars are not for free some company car tax related revenues: Non-deductible car costs of car parc of companies: estimated revenues: 350 Mln Non-deductible car costs of car parc of self-employed: estimated revenues: 150 Mln Benefit in Kind for car parc with allowed private use: estimated revenues: 600 Mln Solidarity contribution for car parc (source: ONSS/RSZ): estimated revenues: 250 Mln Total estimated revenues (without revenues from vat, excise duties) - Total estimated: Mln

7 Company cars at what cost / benefit to state and society? Some considerations When comparing mileage of company and private cars, one should take only the private cars of workers, not all private cars: Cars of non-workers have no commuting nor professional trips Average mileage of company cars is merely higher than that of private cars of workers (KPMG) 1 out of 3 workers in the private sector has a company car. Company cars are part of daily life of 1 out of 4 households. Imagine them without company cars Who and how to compensate the lost benefit? How would this impact the spending power of a family, since 80% of them would return to a private car? Company cars as source of congestion? Research indicates that 80% of company car users would switch to private car if they would have no company car anymore Reverse modal split: a company car would lead workers away from using alternative modes solutions: Broaden modal choice: offer employees a mobility budget rather than just a car budget Free choice for employee is key, provided that his/her modal choice enables the employee to do his/her job properly Ultimate solution: a smart kilometer charging scheme

8 Future Automotive Taxation Febiac vision Smart kilometer charging: logic, simple and the way forward but at what conditions? Principle : who travels less, pollutes less and avoids peak traffic hours and locations, will pay less than today who travels more, pollutes more and in peak traffic conditions, will pay more than today Applicable to trucks, vans & cars, sur tout le réseau routier, cohérence entre Régions Kilometer charging has to replace all existing car taxes (registration taxes and excise duties) Price differentiation based on time, place and environmental performance of the vehicle Earmarking of revenues: users should get value for money, in the first place on the road network Making a Fair Deal with road users: clear communication on the use of revenues and results: 1. Road network optimization: KPI s for road quality, safety, capacity 2. Investments in co-modal infrastructure: P&R