To be continued: benefits in kind for company car further explained

The new calculation for the benefits in kind for company cars already caused a great deal of controversy. In the meantime the new rules are again being amended. Next to that the Federal Government Service for Finance has published answers to frequently asked questions. The amended rules are therefore explained again, taking the recent changes into consideration.

Age of the car has an effect in the calculation

Also for second hand cars the (new) list price is explicitly taken as basic assumption. This basic assumption is as from now mitigated: for older cars a lump sum decrease of 6% per year is applied on the list price (with a maximum of 30%).

The following scheme provides an overview:

Age of the car = 0 to 12 months: 100% of the list price

Age of the car = 13 to 24 months: 94% of the list price

Age of the car = 25 to 36 months: 88% of the list price

Age of the car = 37 to 48 months: 82% of the list price

Age of the car = 49 to 60 months: 76% of the list price

Age of the car = more than 60 months: 70% of the list price

Also in case the car is e.g. 13 years old, still 70% of the list price is taken into consideration.

The age of the car is being assessed as from the first registration with the Car Registration Service (DIV). This implies that when a car was first registered abroad for three years and subsequently is registered in Belgium, 100% of the list price is taken into consideration for the calculation of the benefit in kind.

Each month started counts as a full month.

The amended rules are applicable retroactively as from 1 January. However for the professional withholding tax they only apply as from 1 May. People dealing with pay slips should not take the amended rules into consideration for the first months.

What about VAT?

The calculation starts from the list price, without rebates, but including VAT. The VAT to be taken into consideration is not the actually paid VAT, but the theoretical VAT due on the list price.

Example: your company provides you with a car with a list price of 25.000, excluding VAT. Thanks to the annual car fair the vehicle can be acquired for 20.000. The benefit in kind will still be calculated on 25.000+5.250=30.250. The VAT on the list price, and not the actually paid VAT, is decisive.

What if you don't use the car during a full year?

The car is only a part of the year available

If you only use the car during a part of the year, you can calculate the benefit in kind pro rata temporis based on the number of days the car was available to you. The day you return the car does not count. The first day of availability does.

Temporary non-use of the car

When you temporarily do not use the car because 1) it is being repaired or 2) due to absence caused by illness, holiday or travel abroad, the benefit in kind cannot be decreased. If you are obliged to return the car in case of long illness, than the benefit in kind should be decreased. Attention: decrease is only possible in case you are obliged to return the car, not if you do it voluntarily.

Different cars during the year

If during the year you trade your company car for another one (with a different benefit in kind), the value of both cars should be calculated separately. The same goes when you have a “temporary” car in anticipation of a definitive one.

Still uncertainty about ...

There is still uncertainty about two things. The current explanation foresees that the following practices will be abolished, what will make the tax regime heavier. But also here further amendments can be made.

What with commuting expenses? Until now there was a lump sum exemption: the benefit in kind was considered as the repayment of commuting expenses. Also employees with a company car could use it. The explanation states that this will most likely be abolished as from tax year 2013.

Carpoolers. Also who took carpoolers could decrease the benefit in kind. Also this advantages will probably disappear.