What you need to know about the greening of car taxation

It is no longer news that cars have a strong impact on the environment. Tax law is happy to step in to encourage lower CO2 emissions.

These measures concern passenger cars, light trucks, vans and company cars.

For sole traders and companies: buying a passenger car?

• Passenger cars that emit CO2 (petrol, diesel and hybrid cars) are best purchased, leased or rented before 01/07/2023. The current deduction rules then remain unchanged for the car's entire lifetime. The exception is plug-in hybrids purchased, leased or rented from 01/01/2023: their petrol and diesel costs are deductible up to 50%.
• Fully electric passenger cars and other zero-emission cars are best purchased, leased or rented before 01/01/2027. Their costs then remain 100% deductible for the car's entire lifetime.

• For petrol, diesel or hybrid cars purchased, leased or rented between 01/07/2023 and 31/12/2025, the tax deductibility decreases every year until assessment year 2029 (financial years from 01/01/2028), when it reaches 0%.
• Fossil-fuel cars, as well as hybrids, purchased, leased or rented from 01/01/2026 are no longer deductible.
• Zero-emission cars purchased, leased or rented from 01/01/2027 remain deductible, but the rate decreases over the years.

For sole traders and companies: investing in a charging station?

Charging stations purchased before 01/01/2030 are 100% deductible; from 01/01/2030 this drops to 75%. A temporary increased cost deduction for public smart charging points is possible under certain conditions. The increase is based on the depreciation. Investments made from:

• 01/09/2021 – 31/12/2022: deductible at 200%
• 01/01/2023 – 31/08/2024: deductible at 150%

This increase cannot be combined with the investment deduction of 25% (until 31/12/2022) and 8% (from 01/01/2023).

The investment deduction is only available in the following situations, for a charging station installed in the company's business premises:

• For charging the company cars of employees and directors, for both private and professional trips.
• For charging electric cars owned by employees or directors.
• Where customers of the company may charge their car free of charge during a visit to the business.

For private individuals: investing in a charging station?

When you install a charging station at home, you can benefit from a tax reduction in personal income tax. This is a reduction: if you are already due a refund, you cannot claim it on top. Only when tax is due can you benefit from this reduction.

You can claim expenses of up to €1,500 per person, but the expenses for the same charging point cannot be spread over two taxable periods. For expenses paid, the tax reduction is:

• From 01/09/2021 – 31/12/2022: 45%
• In 2023: 30%
• From 01/01/2024 – 31/08/2024: 15%

Please note: if you install the charging point yourself, you are not eligible for the tax reduction.

Conclusion

Still have questions about the greening of car taxation and what the best move is for your business?