Belgium looks at ending tax breaks for fossil-fueled company cars

The end of tax breaks for company cars with internal combustion engines that burn fossil fuels is within sight in one EU country. Political parties negotiating the formation of a new Belgian government will discuss the policy, which is designed to have only zero-emissions company cars sold or leased by 2023 or 2024.

The need to decarbonise Europe’s road transport if the EU is to remain on target to meet its greenhouse gas reduction obligations has focused efforts on promoting e-vehicles. With company cars accounting for up to 60% of new cars sold in some EU countries – and forecasted to be two out of every three cars sold in 2021 – a significant change to the company car tax regime in favour of e-vehicles could have an impact on efforts to encourage decarbonisation.

Belgium, which offers some of the most generous tax advantages to company cars, is still without a permanent government since elections in May. Now the politician responsible for laying the groundwork for a possible coalition (known as the ‘preformateur’) has suggested that all new company cars must be zero-emissions by 2023 if they are to qualify for tax advantages. This idea is backed by a number of centrist political parties and the regional government of Flanders. In fact, only the far-right Vlaams Belang and the far-left PVDA are against it in the Flemish-speaking part of the country.

Although far from guaranteed to make it into the new government’s policy programme, T&E says the presence of the idea in negotiations is a significant step forward.

T&E director William Todts said: ‘Across Europe we’re spending billions subsidising diesel and petrol cars through things like company cars. It’s great to see that now even the greatest company car paradise of all, my native Belgium, is considering limiting the system to all-electric models. If enacted, this policy alone could make a major contribution to Belgium actually meeting its 2030 goals.’

T&E’s Belgian board member Mathias Bienstman said: ‘If all new company cars are emission free by 2023, the effect on the transport emissions in 2030 would be substantial. One in every two new cars on the road in Belgium is a company car and they drive twice the distance as private cars. The 2023 date is ambitious, but the fact that this is being talked about is progress.’

Meanwhile, in the neighbouring Netherlands, the speed limit is to be reduced to help cut pollution. Following a Dutch court order in May to address nitrogen oxide emissions, the maximum speed limit on the country’s roads will be 100km/h, down from 130km/h, except between 7pm and 6am. (The evening-early morning period covers only about 8-10% of total traffic in the country.) In Belgium too there is talk of reducing speed limits but so far only for the Brussels ring road where a speed reduction to 100km/h has been on the agenda for a long time.