This report was published in June 2025 by the Federal Planning Bureau (Belgium)
In Belgium, close to 60% of new passenger cars sold are company cars. An important share of these company cars can also be used (partially or fully) free of charge for private purposes. Such cars constitute a benefit in kind (BIK): for the beneficiary, it is as if he would receive extra pay, but with the obligation to spend that extra money on a car.
For personal income tax purposes, the benefit in kind (BIK) is calculated as a function of the car’s list price and age, its powertrain, and the difference between its CO2 emissions and the average emissions of cars sold in Belgium in the past year. Company cars are completely exempt from employee contributions to social security, and employer contributions they incur depend only on the car’s fuel and CO2 emissions.
It has long been argued that the widespread use of company cars in Belgium leads to significant budgetary shortfalls compared to a benchmark where they would be taxed in the same way as money wages. Existing estimates of lost revenue for the government (including social security) run from about 2 to 4 billion. There is thus a wide margin in these estimates, even if all authors agree on the order of magnitude.
In this paper, we clarify why these figures vary so much and present a method for estimating the total budgetary cost of company car taxation. Our approach relies on a clear benchmark proposing a “neutral” taxation system for company cars. The analysis confirms the order of magnitude of the existing estimates, but the sensitivity analysis shows that uncertainty remains high.
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