The Death of the Fossil-Fuel Company Car: What's Deductible in 2026 and the Mobility Budget Alternative

If you have ever driven a company car in Belgium, the rules just changed in a way you must understand. The combustion-engine company car is dead from 2026. Not "more expensive". Not "less attractive". Dead, as in 0% tax deductible.

This is the simple founder's view.

The four-line summary

1. New petrol or diesel company car bought from 1 January 2026: 0% deductible. Your company pays for it 100% out of taxed profit.
2. New plug-in hybrid: still survives, but only if you are self-employed (not through a company), and only on a declining curve. 75% deductible in 2026, less in 2027, gone by 2028.
3. New electric car bought before 1 January 2027: 100% deductible. Same generous regime as the old combustion world.
4. The mobility budget is the new tax-friendly path for employees and yourself — and from 2026 its company-car pillar must be fully electric.

That is the whole story. The rest is detail.

What this changes for you, the founder

If you have an existing combustion car owned by your company

You keep the deduction rate that applied when you bought it. The new rules do not retroactively delete your existing benefit. Selling that car and rebuying triggers the new regime — so think twice before upgrading.

If you were planning to buy a petrol/diesel car in 2026

Don't. The tax math is brutal. A €45,000 SUV that used to cost your company ~€7,000–€8,000 a year after deductions now costs ~€15,000+. Buy electric or use the mobility budget.

If you are self-employed and want a plug-in hybrid

You have a small window. 2026: up to 75% deduction. 2027: less. 2028: gone. If the PHEV is your "transition vehicle" before going fully electric, the window is now.

If you are an employer offering company cars

Stop offering combustion. The economics are inverted. Offer:

• A fully electric car under the mobility budget pillar 1, or
• A direct EV company car (still under classic regime, 100% deductible if delivered in 2026), or
• The full mobility budget with public transport + bike + cash for employees who don't need a car.

The mobility budget delivers roughly 45% more net value to the employee per euro you spend than a gross-salary increase — because pillar 2 (transport, bike, housing top-up) is fully exempt.

The number that decides

Here is the number to keep in your head: for any car decision in 2026, electric is the only choice that preserves the historic Belgian advantage.

• Combustion: 0% deductible. Brutal.
• PHEV through a company: 0%. Same outcome.
• PHEV self-employed: 75% in 2026, gone by 2028. Marginal.
• Electric: 100% before 2027, gentle glide down to 67.5% by 2031. Generous.

The transition is asymmetric and intentional. Belgium has the highest density of company cars in Europe and used it as a tax-policy lever to electrify the fleet quickly.

What to do this quarter

1. Inventory your current cars: acquisition date, fuel type, current deduction rate.
2. Decide replacement timing based on the acquisition date — newer cars under the 2023–2025 transitional formula are already losing rate annually.
3. Place EV orders early. Lead times for popular electric models stretch into late 2026.
4. Install a charging station before 31 December 2025 if you want any of the enhanced deduction; from 2025 it's standard rates only.
5. Re-design your remuneration packaging for any employee earning <€100k gross — the mobility budget may be the cheaper way to deliver the same net value.

The honest assessment

The Belgian company car as a tax-efficient compensation tool survives, but only in electric form. The cultural and operational adjustment is real — charging logistics, range anxiety, longer order lead times — but the tax math leaves no realistic alternative.

For most founders, the question is not whether to go electric. It is which model, and how soon.

Legal basis: Art. 66 to 66bis WIB / CIR 92 (deduction of vehicle expenses), as amended by the Programme Law of 25 November 2021 and the Royal Decree of 19 December 2024. Benefit-in-kind regime: Art. 36, §2 WIB. Mobility Budget: Law of 17 March 2019, amended by Law of 25 November 2021 and subsequent.

Phase-out schedule (Art. 66 WIB)

Combustion-engine vehicles (petrol, diesel, hybrid non-PHEV)

The Belgian regime uses a CO₂-indexed deduction formula rather than a single flat rate:

``` Deduction% = 120% − (0.5 × CO₂ × Coefficient) ```

Where Coefficient = 1 (diesel), 0.95 (petrol/LPG/CNG), 0.90 (hybrid). Capped between 50% (in transitional period) and the regulatory maximum/minimum.

Phase-out application by acquisition date (purchase or financial lease):

• ≤ 30 June 2023: historical formula, capped 50–100%.
• 1 July 2023 to 31 December 2025: transitional formula, cap lowered annually; maximum drops from 100% → 75% → 50% → 25% across the period.
• From 1 January 2026: maximum deduction 0%. The CO₂-based formula yields 0% irrespective of CO₂ value for new acquisitions.

The cut-off is on acquisition date, not on delivery or use date.

Plug-in hybrid vehicles (PHEV)

PHEV are defined as vehicles with electric range ≥ 50 km (under the legal definition; some narrow exceptions exist).

For companies (vehicle owned/leased by a legal entity for use by directors/employees):

• Aligned with combustion phase-out: 0% from 1 January 2026 for new acquisitions.

For self-employed natural persons (vehicle owned in private patrimony, used professionally; or vehicle in the patrimony of a sole proprietorship):

• 2026: maximum 75% (CO₂-dependent — the formula yields a deduction between 50% and 75% based on emissions).
• 2027: maximum 65%.
• 2028: maximum 0% (fully aligned with company regime).

Zero-emission vehicles (battery electric, hydrogen)

Acquired before 1 January 2027: 100% deduction.

Acquired in:

• 2027: 95%
• 2028: 90%
• 2029: 82.5%
• 2030: 75%
• 2031 onwards: 67.5%

The deduction rate is set at acquisition and runs for the lifetime of the vehicle in the patrimony of the taxpayer. A car bought in 2026 keeps 100% for its entire economic life, even into 2031.

Light commercial vehicles (LCV)

Not affected by the phase-out. Standard deduction at 75% of professional use (the "personal use limit" continues to apply). LCV definition follows the registration certificate "N1 with cargo" classification.

Charging stations (Art. 64quater WIB, separate regime)

• Publicly accessible charging stations installed between 1 September 2021 and 31 March 2024: 200% enhanced deduction over depreciation period.
• 1 April 2024 to 31 December 2024: 150%.
• 2025 onwards: 100% (standard).

• Private charging stations (home/office, not public): separate accelerated depreciation regime; effective deduction over the depreciation period typically 100–125% depending on date.

Benefit-in-kind (BIK / VAA / ATN) — Art. 36, §2 WIB

The benefit-in-kind for the private use of a company car is calculated as:

``` BIK = Catalogue value × (5.5% + 0.1% × (CO₂ − Reference)) × Age coefficient ```

• Reference CO₂ for 2026: 65 g/km (petrol/LPG/CNG/hybrid) and 53 g/km (diesel). Both decline annually toward zero by 2030, mechanically increasing the BIK for any combustion vehicle.
• Floor: €1,600 per year (indexed) for an electric car; effective minimum BIK.
• Age coefficient: 100% in year 1, declining to 70% in year 6+.

For employees and directors, the BIK is added to taxable salary; the employer pays a CO₂ contribution (solidarity contribution) at the ONSS / RSZ, also indexed and growing.

VAT recovery on cars (Art. 45, §2 BTW-Wetboek / Code TVA)

Unchanged by the corporate tax phase-out:

• Hard cap: 50% VAT deduction on car-related expenses (Art. 45, §2 W.BTW).
• Below 50%: limited to actual professional use, calculated via logbook, semi-forfait formula, or default 35%.

This rule applies to all vehicles including electric. The 50% cap is independent of the corporate tax deduction rate.

Mobility Budget (Law of 17 March 2019)

Range for 2026: minimum €3,233, maximum €17,244 per calendar year, indexed.

Pillar 1 — Environmentally friendly car

From 1 January 2026: vehicle must be 100% electric (battery electric or fuel cell). PHEV and any combustion vehicle excluded under pillar 1.

The cost includes all car-related operational expenses (charging, insurance, maintenance, depreciation).

Pillar 2 — Sustainable mobility and accommodation

• Public transport subscriptions (employee + family).
• Soft mobility: bicycle, e-bike, scooter, walking shoes (yes, including subsidised).
• Housing top-up: rent/mortgage interest for housing within 10 km of the workplace (capped).
• Sustainable transport services: car-sharing, parking at transit stations.

Tax treatment: fully exempt for the employee, fully deductible for the employer.

Pillar 3 — Cash residual

Any unspent budget is paid as cash. Subject to a 38.07% special social security contribution (employee-side only; employer contributions are exempted). No personal income tax. Net retention rate of approximately 62%.

Comparison vs salary equivalent

A €15,000 mobility budget, optimally allocated:

• Pillar 1: €8,000 EV cost — net cost to employer ~€8,000.
• Pillar 2: €4,000 public transport + bike — fully exempt, fully deductible.
• Pillar 3: €3,000 cash — €1,142 social contribution, employee retains ~€1,858.

Employer cost: ~€15,000. Employee net value: ~€13,858 + EV access.

Equivalent gross salary needed to deliver same employee net: ~€26,000+. Mobility budget delivers ~45% more value to the employee per euro of employer cost in this scenario.

Audit-defence file for vehicle deductions

For each vehicle in the company patrimony:

1. Acquisition contract with clear date (purchase order or signed lease contract).
2. Registration certificate (CO₂, fuel type, N1/M1 classification).
3. Logbook or semi-forfait calculation for VAT professional use.
4. Annual BIK / VAA calculation for company directors and employees.
5. CO₂ solidarity contribution evidence (ONSS / RSZ payment).
6. Charging infrastructure invoices linked to the vehicle (if applicable).

Mismatch between acquisition date and deduction rate is the most common audit finding. A car ordered in November 2025 but registered in January 2026 has a contested acquisition date — typically resolved on the order date if a binding contract was signed.