As explained in our previous newsletter (www.lydian.be , E-zine, "Changes in Belgian tax legislation), the Belgian Government has - as of January 1st, 2012 - modified the calculation method for the taxable benefit in kind of company cars. For many employees, the new rules on taxation of company cars will lead to a severe increase of their taxable remuneration and effective tax burden. The new formula to calculate the taxable benefit in kind takes into consideration various criteria such as CO2-emmission of the car and the official catalogue price of the car: 6/7 x catalogue price of the car x CO2 emission percentage.
In response to the flood of criticism, the Government has now slightly modified the calculation method and added a "depreciation" factor for older cars. The new calculation method provides for an assumed annual value reduction of 6%, with a maximum of 30% in total.
A second amendment concerns the definition of the "catalogue price" of the car. The catalogue price is equal to the official price of the car when newly sold to an individual, including options and the actual paid VAT, but excluding any rebates. In order to calculate the benefit in kind, the same definition will apply both for new and second-hand cars, as well as for leasing cars.
On the corporate side, as of January 1st, 2012, the amount of so-called "disallowed expenses" of the corporate taxpayer is increased with 17% of the above mentioned taxable benefit in kind of a company car.