Belgium’s Company Car Tax Break Faces Budget Scrutiny
As Belgium’s federal government officially opens budget negotiations today, one of the country’s most deeply embedded workplace perks has found itself in the crosshairs: the salary car. With the De Wever government needing to find 10 billion euro in savings by the end of September, federal government services have proposed scrapping or limiting the fiscal advantage for company cars—a move that could yield up to 5.5 billion euro, nearly half of what the government needs to find.
The proposal, put forward by the government services of Finance, Economy, Public Health, and Policy as part of a broader series of savings on fiscal support for fossil fuels, was included in a 263-measure catalog compiled by the Federal Planning Bureau at the government’s request. According to VRT NWS, the Planning Bureau estimates that treating the company car benefit more like regular income could generate approximately 5.2 billion euro per year in additional fiscal and parafiscal revenues by 2028.
How the Fiscal Advantage Works
The salary car system developed as a way to circumvent Belgium’s high taxes on labor. Employees who receive a company car for private use are taxed on a “voordeel van alle aard” (VAA—benefit of all kinds), but crucially, that tax is not based on the actual cost of the vehicle. Instead, it’s calculated using a formula based on catalog value, CO2 emissions, fuel type, and vehicle age.
Michel Maus, professor of tax law at the VUB, explains the discrepancy: “The general rule is that the employee is taxed on the actual value of the benefit received, and that is exactly what does not happen with company cars. For an average company car, the cost is quickly 800 euro, while the employee is only taxed on a quarter of that, about 200 euro per month.”
The numbers are staggering. Nearly 60 percent of newly sold passenger cars in Belgium are company cars, and approximately 630,000 salary cars are on Belgian roads. The number of company cars in the country more than doubled between 2007 and 2024, from 272,000 to 626,000.
Political Battle Lines Drawn
Budget Minister Vincent Van Peteghem (CD&V) suggested in De Morgen that salary cars are likely in Premier De Wever’s white folder of possible measures. As Redactie24 reports, Van Peteghem said: “I suspect that the salary cars are also in Bart De Wever’s white folder.”
But within the coalition, resistance is already fierce. CD&V chairman Sammy Mahdi declared at the Voka congress that abolishing company cars is non-negotiable. “We are not of the opinion that you should solve the hole in the budget at the expense of the working person,” Mahdi said, according to the VRT NWS liveblog. “I think we should first and foremost get as many people as possible into work. We are one of the countries with the lowest employment rate in all of Europe.”
N-VA chair Valerie Van Peel said her party is not planning to raise the abolition of company cars during budget negotiations, focusing instead on cutting expenditures. Meanwhile, political journalist Ivan De Vadder characterized the current phase as “floating trial balloons and shooting them down,” noting that “the government wants to lower taxes and by scrapping the company car you increase taxes. That measure is really not going to happen.”
The Employer Perspective
On the business floor, the uncertainty is palpable. Liesbet Vanderstappen, HR director at PwC Belgium, which operates a fleet of about 1,500 cars (76 percent fully electric), says the possibility of abolition is having a real impact. “Especially the uncertainty is very present, with us as employer but also with the employee. The possibility that this will be abolished will have a major impact on many people.”
At PwC, 15 percent of employees eligible for a company car already choose not to take one, opting instead for the mobility budget. But Vanderstappen notes that “when I say 15 percent does not choose it, that also means 85 percent deliberately does choose it. There is still no full-fledged alternative that gives equal value to employees against a cost that is acceptable for us as employer.”
Two Levers to Pull
According to Maus, anyone seeking to reform the system can pull two levers: taxing the employee benefit more heavily, or limiting the employer’s tax deductibility of the vehicle. The first option clashes head-on with the government’s own agenda of making work pay more by reducing taxes on labor.
The second lever has already been pulled. New contracts for CO2-emitting cars have not been fiscally deductible since the beginning of 2026. Electric cars ordered this year remain 100 percent deductible until 2031, after which the percentage gradually decreases to 67.5 percent for cars ordered in 2031.
The Electrification Dimension
A radical intervention could have consequences beyond the budget. Belgium has been praised by the European Commission as a “good practice example” for electrifying its company car fleet, which has become a key driver of the country’s transition to electric vehicles. Scrapping the fiscal advantage could disrupt that progress and further pressure an auto sector already struggling.
The budget context is severe. Belgium’s deficit stands at around 5.1 percent and would rise to 6.2 percent by 2031 under unchanged policy. The debt ratio is 110 percent and would reach 122 percent by 2031. Prime Minister De Wever has warned that “regardless of how we approach it, it will not be easy,” adding that “the population is mature and ready for it. Much more than some politicians think.”
What to Watch For
The budget conclave at the end of September will be decisive. With a mid-October deadline for a full agreement, the coming weeks will reveal whether the salary car advantage survives intact, faces incremental adjustments, or becomes a bargaining chip in broader negotiations. As De Vadder notes, we are still in the phase of testing the waters—but with billions at stake, the salary car has firmly landed on the budget table.