2015 Tax Brochure Company Cars

Transcription

1 2015 Tax Brochure Company Cars Foreword This brochure describes the latest situation regarding tax on company cars. By company cars we mean passenger cars, dual-purpose vehicles and minibuses. A light commercial vehicle is a vehicle designed and built for the transport of goods and that has a maximum authorised mass not exceeding 3,500 kg. In Belgium, these light commercial vehicles are treated differently to passenger cars for tax purposes. More information: Tax Brochure Light commercial vehicles Most monospace (MPV), off-road (SUV) and luxury 4x4 vehicles do not meet the tax definition of a light commercial vehicle and are therefore taxed as passenger cars. Overview of tax news for the employer Components VAT (4) Tax deduction (5) Lease price of company car: Financial depreciation Maintenance and repairs Tyres Breakdown assistance Insurance Vehicle registration tax (1) Road tax (2) Non-recoverable VAT Based on CO 2 emissions: lease price + non-recoverable VAT Fuel 75% Interest N/A 100% CO 2 solidarity contribution (3) N/A 100% Additional disallowed expenses (5.3) N/A N/A Overview of tax news for the employee Benefit in kind (7)

2 Contents 1 Vehicle registration tax (BIV) What? Rates Road tax What? Rates Additional information CO 2 solidarity contribution What? Formulae for calculating the CO 2 contribution For example VAT Personal use with no employee contribution Personal use with employee contribution Questions Tax deductibility of car expenses What? Tax deductibility for corporation tax Additional disallowed expenses with respect to the employer Tax deductibility for personal income tax Scheme VAT deduction and tax deduction Benefit in kind for company cars What? Formula for flat-rate calculation Numerical example How is the benefit in kind imposed on the employee? Questions Flat-rate kilometre allowance

3 1 Vehicle registration tax (BIV) 1.1 What? Vehicle registration tax is a one-off tax that is collected when a new or used passenger car, dual-purpose vehicle, minibus or motorcycle is registered for use on public roads by one particular person. The taxpayer is the individual or legal entity identified on the registration document. Following the vehicle s registration with the Vehicle Registration Department (Dienst Inschrijvingen Voertuigen or DIV) of the Flemish tax authorities, the taxpayer will automatically receive a tax assessment notice. With effect from 1 January 2011, the Flemish Region is empowered to collect the vehicle registration tax. This applies for all individuals who have their domicile and all legal entities that have their registered office in the Flemish Region. On 1 March 2012, a new rate scale came into force for vehicle registration tax in the Flemish Region. The new green registration tax means that the calculation is no longer based on the power of the engine. The new calculation is based on type of fuel, age and certain environmental features of the vehicle such as CO 2 emissions and engine euros standard. The new regulations provide for a transition period. The new scheme does not apply to companies with leasing activities that meet certain conditions. The old scheme still applies for the time being for leased vehicles. Therefore, the tax for leased company cars that are put on the road by the leasing company is still calculated on the basis of: the power of the engine expressed in kilowatts (kw) or fiscal horsepower (hp); the age of the vehicle, determined using the date of first registration in Belgium or abroad. 3

4 1.2 Rates 1 The tables below show the rates. If a leased vehicle is registered in the Flemish Region in the name of the lessee instead of the name of the lessor (KBC Autolease), the tables below do not apply and the new green registration tax scheme applies. Cyl. cap. in l* hp Vehicle registration tax (BIV) applicable to passenger cars, dual-purpose vehicles, and minibuses Diesel or petrol vehicles kw Up to 12 months 12 to 24 months Age of the vehicle 24 to 36 months 36 to 48 months 48 to 60 months to 8 0 to and to to to to to 120 1, , and to 155 2, , , , , > 3.5 > 17 > 155 4, , , , , * Cylinder capacity in litres. Note: if the power of a given engine expressed in fiscal horsepower (hp) and kilowatts gives rise to the levying of a different amount of the registration tax, the highest amount of tax is payable. Most monospace (MPV), off-road (SUV) and luxury 4x4 vehicles are not deemed to be light commercial vehicles for tax purposes and are therefore taxed as passenger cars. 1 You will find an overview of all the rates at 4

5 2 Road tax 2.1 What? The road tax is an annual tax levied on motor vehicles used to transport people or goods by road. For passenger cars and related vehicles, the taxpayer is the individual or legal entity identified on the vehicle s registration certificate. With effect from 1 January 2011, the Flemish Region is empowered to collect the annual road tax. This applies for all individuals who have their domicile and all legal entities that have their registered office in the Flemish Region. The road tax is automatically payable with effect from the registration with the Vehicle Registration Department (DIV). The amount of road tax is calculated on the basis of statutory scales set for each type of vehicle: passenger cars, trucks, motorcycles, tractors, etc. The rate for passenger cars depends on the power of the engine in horsepower for tax purposes. 2.2 Rates 2 Cylinder capacity (in litres) Road tax for passenger cars Horsepower for tax purposes (hp) 0 to and less Amount of the road tax (including surcharge) euros (minimum tax) 0.8 to euros 1 to euros 1.2 to euros 1.4 to euros 1.6 to euros 1.8 to euros 2.0 to euros 2.2 to euros 2.4 to euros 2.6 to euros 2.8 to euros 3.1 to , euros 3.3 to , euros 3.5 to , euros 3.7 to , euros 4 to , euros 4.2 and higher 20 and higher 1, euros euros for each HP higher than 20 Vehicles that run on LPG are subject to an additional road tax. Rates valid from 1 July 2015 to 30 June Indexed annually on 1 July. 2 You will find an overview of all the rates at 5

6 2.3 Additional information Additional information on vehicle registration tax (BIV) and road tax can be obtained from: Agentschap Vlaamse Belastingdienst (VLABEL Flemish Tax Authorities Agency) Vaartstraat Aalst Tel.: 1700 (Flemish info line) 6

7 3 CO 2 solidarity contribution 3.1 What? Employers who make a vehicle available to an employee, which can be used for purposes other than business, must pay a solidarity contribution. This monthly contribution depends on the vehicle s CO 2 emissions and type of fuel, and is a fixed amount. The amount is also linked to the health index of September 2004 and is adjusted each year in January. The indexation coefficient is with effect from 1 January Passenger cars, dual-purpose vehicles, minibuses and light commercial vehicles are all subject to the CO 2 solidarity contribution. 3.2 Formulae for calculating the CO 2 contribution CO 2 solidarity contribution Type of fuel CO 2 emissions Base formula Indexation coefficient Result Diesel Known {[(CO 2 in g/km x 9.00 euros) 600] / 12} Calculation Unknown {[(165 x 9.00 euros) 600] / 12} euros Petrol Known {[(CO 2 in g/km x 9.00 euros) 768] / 12} Calculation x Unknown {[(182 x 9.00 euros) 768] / 12} euros Lpg {[(CO 2 in g/km x 9.00 euros) 990] / 12} Calculation Electric euros euros These formulae are valid with effect from 1 January The correct CO 2 emissions are stated on the vehicle s certificate of conformity. The monthly contribution cannot amount to less than euros. An LPG vehicle is a converted vehicle that was originally fuelled by petrol. The formula uses the CO 2 emissions of the petrol vehicle. 3.3 For example The monthly CO 2 solidarity contribution for a diesel vehicle with CO 2 emissions of 115 g/km amounts to: [((115 x 9.00 euros) - 600)/12] x = euros 7

8 4 VAT The employer pays the leasing company an amount each month or quarter to lease the company car for its employee. This amount is subject to 21% VAT. Employers/lessees registered for VAT can reclaim part of the VAT paid. Since 1 January , new mandatory VAT rules apply: The VAT deduction is immediately restricted on the basis of the private use; The method of calculation depends on whether or not an employee pays a contribution for use of their company car; The rules are applicable to both purchased and leased vehicles; The rules also apply to all the expenses related to the vehicle that are taxed with VAT, such as fuel, maintenance, repairs, and purchases of accessories; There is no longer any VAT levied on the benefit in kind (if there is no employee contribution); The maximum VAT deduction for passenger cars is 50%. The new rules came into force on 1 January Therefore the old rules can be applied for 2012, with which, in addition to the 50% deductibility limit, VAT must also be paid on the benefit in kind. However, taxpayers can also opt to already apply the new rules for Personal use with no employee contribution If a company car is made available with no contribution from the employee, the VAT deduction must be limited according to one of three methods imposed by the VAT authorities Method 1 Kilometre recording for work-related travel Applicable to passenger cars and light commercial vehicles This method means a number of details must be recorded and kept for each vehicle: Daily journeys for professional purposes: - Date of the journey - Starting address - Finishing address - Number of kilometres driven per journey - Total number of kilometres driven per day The starting and finishing numbers of the kilometre indicator on an annual basis The kilometre recording can be maintained both manually, e.g., using a logbook, and automatically, e.g., using an adapted GPS system. The professional portion is calculated as follows: number of km professional use Professional use in % = total distance x100 The maximum VAT deduction is, in all cases, 50% for passenger cars. 3 Legislative framework Amendment to the Belgian VAT Code on 1 January 2011 Decree of 20 October 2011 (ET ) Decree of 11 December 2012 (ET /3) Decree of 9 September 2013 (ET /4) 8

9 4.1.2 Method 2 Partially flat-rate calculation for professional use Applicable to passenger cars Professional use for each vehicle is calculated on the basis of a formula with a number of fixed factors: Private in use % = (distance home to work x 2 x 200 working days) + 6,000 km Total distance in km x100 Professional use in % = 100% - private in use % Distance home to work = the actual distance between the home address to the registered office or local office in km Total distance in km = the actual distance driven in a calendar year in km (vehicle kilometre indicator) 200 working days = flat-rate number of working days 6,000 km = flat-rate calculated number of kilometres for private use The maximum VAT deduction is 50%. This method may only be used when there is a fixed user and only one car per user Method 3 Fixed-rate deduction Applicable to passenger cars The professional usage is set using a general flat rate: Professional use in % = 35% This method: Must be applied to all passenger cars of the company or VAT group that are used for both work and private purposes. Must be applied for a minimum period of four calendar years Method 4 Fixed-rate deduction Applicable to light commercial vehicles used for both work and private purposes The professional usage is set using a general flat rate: Professional use in % = 85% This method: is only applicable if the light commercial vehicle is mainly used to transport goods, materials or equipment as part of business activities. (if this condition is not met, then professional use will be calculated based on a general flat rate of 35%). must be applied to all mixed-use light commercial vehicles belonging to the company or VAT group. must be applied for a minimum period of four calendar years. 9

10 4.1.5 Points of attention The first and second methods can be combined with each other for the various vehicles of the same company. This option applies for the (current) calendar year. Under the first and/or second methods, a separate overall average deduction percentage can be applied for all the vehicles of the same type ( passenger cars, light commercial vehicles ). The average percentage is equal to the sum of the individually calculated percentages divided by the number of vehicles. The fixed-rate deduction method (methods 3 and 4) per category (passenger cars/light commercial vehicles) may not be combined with another method. The fixed-rate deduction method as it applied to passenger cars may be combined with method 1 as it applied to light commercial vehicles and vice versa. In the case of a VAT group, all companies must opt for the same method per vehicle category (passenger cars/light commercial vehicles: either the fixed-rate deduction method (3 or 4) or method 1 and/or 2). After the end of the first year, there must be a review every year if it appears that the actual amount driven for work purposes for the preceding year differs from the initially estimated professional portion. Needless to say, no review is required with methods 3 and 4. The non-deductible VAT can be introduced at the end of the financial year as expenses according to the tax deductibility percentages (see point 5). If you lease a company car from KBC Autolease, you will only pay VAT on the difference between the investment value and residual value. Conversely, if you buy your car, you must pay VAT on the full purchase price. 10

11 4.1.6 Cijfervoorbeeld personenwagen zonder bijdrage van de werknemer Formulas Private use in % Professional use in % Method 1 Method 2 Method 3 Kilometre recording - number of km prof. use x 100 total distance Flat-rate calculation of private use (home to work x 2 x 200) + 6,000 x 100 total distance General flat rate 100% - private use in % 35% Details needed Professional kilometres 20,000 km Total distance 32,000 km 32,000 km Home to work A 10 km Home to work B 30 km Home to work C 50 km Professional use in % - result Home to work A 10 km A 10 km 69% Home to work B 30 km 63% B 30 km 44% 35% Home to work C 50 km C 50 km 19% VAT deduction in % - result (1) limited to maximum 50% Home to work A 10 km A 10 km 50% Home to work B 30 km 50% B 30 km 44% 35% Home to work C 50 km C 50 km 19% VAT calculation how much is deductible and how much is not deductible? Monthly lease euros euros euros 21% VAT (2) euros euros euros A 10 km euros VAT deduction (3) = euros B 30 km euros (1) x (2) C 50 km euros euros Total VAT cost A 10 km euros = non-deductible VAT euros B 30 km euros euros = (2) - (3) C 50 km euros Personal use with employee contribution If the employee pays a net contribution for the private use of the vehicle, there is an issue of a lease subject to VAT. This leads to a combined VAT levy: VAT on the vehicle expenses with respect to the employer: limited deduction of 50%. VAT of 21% levied on the contribution paid by the employee VAT on the vehicle expenses The VAT authorities maintain the position that in this case as well, the employer cannot be deemed to be practicing the leasing of automobiles, which means the 50% deductibility limit continues to apply. 11

12 4.2.2 VAT on the employee s contribution The net contribution from the employee contains the VAT (at 21%), which must be paid by the employer via its VAT return. The VAT authorities also set a minimum criterion for VAT for the employee s contribution, which means there will be an addition of VAT if the employee s contribution is less than the minimum value (or normal value ). This normal value is calculated as follows: Normal value = annual vehicle expenses x (50% - % actual professional use) The actual professional use must be calculated using one of the methods listed under point 4.1. Only if the professional use defined in this way is lower than 50% will there be actual taxation based on the normal value. If method 3 (general flat rate of 35%) is selected, the normal value is equal to 15% of the annual vehicle expenses. The VAT authorities have made it mandatory to calculate the minimum value for each vehicle. On the basis of this method, employers can determine the personal contribution in such a way that the same situation is obtained as making the vehicle available at no cost. If the required contribution is higher than the normal value, this will lead to a higher VAT levy Numerical example with contribution from the employee High contribution from employee Low contribution from employee Details needed Annual vehicle expenses 500 x 12 = 6,000 euros 500 x 12 = 6,000 euros Employee s contribution 150 x 12 = 1,800 euros 50 x 12 = 600 euros Professional use select 1 of the 3 methods Method 3 = 35% Method 3 = 35% VAT calculation 21% VAT on the vehicle expenses 1, euros 1, euros VAT deduction of 50% euros euros Non-deductible VAT (1) euros euros 21% VAT on employee contribution (2) = employee contribution / 1.21 x 21% 1,800 / 1.21 x 21% = euros 600 / 1.21 x 21%= euros Calculation of normal value = annual vehicle expenses x (50% - professional use) 6,000 x (50% - 35%) = euros 6,000 x (50% - 35%) = euros VAT on the normal value (3) = normal value x 21% Additional VAT if (3) > (2) equal to = (3) - (2) = (4) 900 x 21% = euros 0.00 euro 900 x 21% = euros = euros Total VAT cost = (1) + (2) + (4) euros euros 4.3 Questions For general questions, call the Contact Centre of the FOD Finance on For more specific questions, it is best to contact your local VAT inspection office. 12

13 5 Tax deductibility of car expenses 5.1 What? Tax deductibility means that certain expenses can be partially or fully deducted from income. These expenses reduce the taxable base and therefore also the corporation tax. 5.2 Tax deductibility for corporation tax Deductibility of car expenses with regard to benefit in kind The tax authorities have made it clear in their circular, AFisc 30/2014, that the cap for deducting car expenses for corporation taxation purposes is only applicable to those costs which exceed the sum of the benefit in kind payable by the employee. In other words, a company can deduct 100% of the car expenses equivalent to the amount of the benefit in kind payable by its employees. This rule also applies retroactively since 1 January How exactly is this done? The benefit in kind is broken down into a fuel component and a component for other car expenses. In practice, the 30/70 ratio is used: 30% of the benefit in kind is deducted from the fuel costs; 70% of the benefit in kind is deducted from the car expenses Tax deductibility rates The remaining car and fuel expenses (i.e. after deducting the amount for benefit in kind) are subject to the deductibility cap. A distinction is made between the various kinds of expenses: The annual car expenses and the non-recoverable VAT can be included as expenses according to the tax deductibility rates, calculated based on the car s CO 2 emissions and fuel type. There are 8 categories ranging from 50% to a maximum of 120% deductibility. The tax authorities base the applicable category on the CO 2 emissions as listed on the vehicle registration certificate. Since 1 January 2010, only 75% of the fuel costs and non-recoverable VAT can be deducted for both personal income tax and corporate income tax. The interest is 100% tax-deductible. What? Tax deductibility rates for the 2015 income year Diesel CO 2 emissions in g/km Petrol / LPG / natural gas Electric Tax deductibility 0 120% % % Car expenses % % % % > 195 > % Interest 100% Fuel 75% 13

14 Deduction for diesel vehicles is limited to 50% if they have CO 2 emissions of more than 195 g/km or if the Vehicle Registration Department has no available data concerning their CO 2 emissions. Deduction for petrol vehicles is limited to 50% if they have CO 2 emissions of more than 205 g/km or if the Vehicle Registration Department has no available data concerning their CO 2 emissions Tax benefit The tax benefit is then equal to the sum of the costs (car expenses, fuel costs and interest) multiplied by the respective tax deduction (see table) and multiplied by the rate of corporation tax (maximum of 33.99%) Parking and garage costs The CO 2 deductibility limit also applies to parking and garage expenses for company vehicles. The CO 2 dependent deductibility limit for corporation tax does not apply to costs for parking or garage spaces for vehicles belonging to staff members or to customer parking spaces. These costs are 100% deductible Refunded parking costs The CO 2 dependent deductibility limit also applies to refunds made to employees for parking costs incurred on their business trips. 5.3 Additional disallowed expenses with respect to the employer Part of the additional tax burden on company vehicles as a result of the new legislation 4 will be recovered from the employers. 17% of the taxable benefit that is calculated for employees using the set formula below (see point 6.2) is added to the disallowed expenses (i.e. increase in non-deductible costs for the employer and thus an increase in the taxable result) and is, therefore, subject to corporation tax. The actual cost is equal to the taxable benefit x 17% x 33.99% (at the standard rate of corporation tax). The additional disallowed expenses are at least euros (i.e. 17% of 1,250 euros) and this results in an additional cost of at least euros (i.e euros x 33.99%). 5.4 Tax deductibility for personal income tax For self-employed people, members of the liberal professions and employees who are taxed through personal income tax, the tax deductibility of car expenses and fuel is 75%, regardless of the CO 2 emissions. The deductibility of car expenses for the amount of the benefit in kind can also be applied to self-employed persons subject to personal income tax insofar as they offer a company car to an employee and these benefits are taxed by way of the pay slip. Because all costs are deductible at a rate of 75% in this case, a distinction must be made between fuel expenses and the other car expenses. 4 Act of 28 December

15 6 Scheme VAT deduction and tax deduction VAT deduction Tax deduction VAT on lease fee 21% Employee pays a contribution No contribution 50% of VAT deductible 50% of VAT nondeductible X% of VAT deductible (max. 50%)* Y% of VAT nondeductible Non-deductible VAT on interest Non-deductible VAT on capital 100% deduction Personal income tax: 75% deduction Corporation tax: % deduction** * See 4.1: VAT deduction according to one of the methods ** See 5.2: Tax deductibility for corporation tax 15

16 7 Benefit in kind for company cars 7.1 What? Employees and business managers whose employer or company has provided them with a company car (passenger car, dual-purpose vehicle or minibus) free of charge, and who are also authorised to use this vehicle for personal purposes, will be taxed a flat-rate benefit in kind. 7.2 Formula for flat-rate calculation The following flat-rate formula applies with effect from 1 January Benefit in kind = list price x CO 2 emissions percentage x 6/7 x car age percentage What is the vehicle list price? - List price of the vehicle in new condition when sold to a private individual - Including options - Including actual VAT paid - Without taking into account any discount, reduction, rebate or refund. To check the list price (Auto-i database of federauto) used to calculate the benefit in kind, a request can be submitted on the website of the FOD Finance at &type_doc=data3 Percentage based on the CO 2 emissions of the company car - Standard percentage of 5.5% - for a diesel vehicle with CO 2 emissions of 91 g/km - for a petrol vehicle with CO 2 emissions of 110 g/km % per 1 g/km more up to a maximum of 18%, or % per 1 g/km less with a minimum of 4% Percentage car age A month already started counts as a complete month Percentage of the list price used for calculating the benefit in kind From 0 to 12 months 100% From 13 to 24 months 94% From 25 to 36 months 88% From 37 to 48 months 82% From 49 to 60 months 76% From 61 months 70% * A month already started counts as a complete month. Additional limit: the benefit in kind for the 2015 income year (2016 tax assessment year), will amount to at least 1,250 euros per year, indexed for the 2015 income year. If no data are available for the CO 2 emissions of a vehicle, the following fixed values must be used: g/km for petrol, LPG, or natural gas vehicles g/km for diesel vehicles. 16

17 7.3 Numerical example Vehicle list price, excluding VAT 22,000 euros Price of options, excluding VAT 2,000 euros Discount 5,000 euros CO 2 emissions 115 g/km Date first registered 15 March 2014 Diesel vehicle List price 27,990 euros Amount List price List price excluding VAT 22,000 List price excluding VAT 22,000 Options excluding VAT 2,000 Options excluding VAT 2,000 Discount -5,000 Actual VAT payed 3,990 Total price excluding VAT 19,000 Total price 27,990 Actual VAT payed (21%) 3,990 CO 2 emissions percentage = 5.5% + (115 91) x 0.1% = 7.9% Percentage car age - January and February = 100% 2 months at 100% - From March onwards = 94% 10 months at 94% The benefit in kind for 2015 is equal to: [(27,990 euros x 7.9% x 6/7 x 100%) x 2/12] + [(27,990 euros x 7.9% x 6/7 x 94%) x 10/12] = 1, euros 7.4 How is the benefit in kind imposed on the employee? The taxable benefit in kind is added to the employee s taxable pay. An employee who receives this benefit must pay taxes on it. It will be taken out in the payroll accounting by means of an increased deduction of payroll withholding tax from the employee s salary. 7.5 Questions You can find the frequently asked questions (FAQ) of the tax authorities at or 5 For the definition of a light commercial vehicle for tax purposes, please refer to Section 4 2 of the Belgian code for taxes equivalent to income tax. 17

18 8 Flat-rate kilometre allowance Employees who make business trips with their own vehicle can be reimbursed for this in one of two ways. The employer opts either to reimburse the actual costs, or to pay a flat-rate kilometre allowance. The majority of employers prefer to use a flat-rate kilometre allowance because it s simpler in terms of administration. For the period from 1 July 2015 to 30 June 2016 inclusive, this flat-rate allowance amounts to euro per kilometre. The employee does not have to pay any tax on this reimbursement. The employer can recognise this cost as deductible car expenses. The tax authorities estimate the cost of fuel consumption (in the part of the flat-rate kilometre allowance) at 30% and the other vehicle costs at 70%. Fuel costs are 75% deductible; The other vehicle costs can be deducted from corporation tax according to the CO 2 emissions (see 5.2). However, the flat-rate kilometre allowance rule only applies if the number of kilometres driven on behalf of the employer is not abnormally high. If this number amounts to more than 24,000 kilometres a year, the authorities can conduct an audit and the taxpayer will have to provide additional evidence. If the reimbursements exceed the flat rate of euro/km, in principle this is deemed to be pay and the employee will be subject to tax and social security contributions on it. Only if the evidence is produced to demonstrate that the reimbursement corresponds to the actual costs, will this be accepted by the tax administration and not be taxed. In collaboration with Disclaimer This document has been drafted in general terms and cannot therefore be used as a guideline for specific situations. As the answers provided in this document in response to questions are based on a general understanding of the facts and circumstances of possible cases, they cannot serve as a substitute for a specific recommendation adapted to the facts of each individual case. The application of the principles set out in this document depends on the specific circumstances of each factual situation. We therefore recommend seeking professional advice before deciding for or against any specific course of action based on the contents of this document. Deloitte will be pleased to further advise readers on how the principles cited in this document must be adapted to their specific situation. In the absence of such specific advice, Deloitte accepts no responsibility or liability towards the recipient or any other party having access to this document. About Deloitte Deloitte refers to one or more entities of Deloitte Touche Tohmatsu Limited (DTTL), a company established under the laws of the United Kingdom ( private company limited by guarantee ), and to its network of affiliates, which are all legally independent and autonomous entities. Go to for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its affiliates. KBC Autolease NV Prof. R. Van Overstraetenplein Leuven Tel Fax autolease@kbcautolease.be 18