Company car

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Social security treatment

Limited NSSO contributions
Employee Taxation

Favourable taxation
Employer deductibility

Deductible

Social Security Treatment Description

While the benefit that an employee derives from the private use of a company car is not subject to normal social security contributions, a solidarity contribution - known as the CO2 contribution - is nevertheless payable by the employer following the private use of company cars (purely private trips and/or commute between home and work). The absence of private use is assessed very strictly.

The monthly amount of this CO2 contribution, which is a minimum of EUR 33.22 for cars purchased or leased before 1 July 2023 or EUR 37.33 for cars purchased or leased on or after 1 July 2023 (for 2025). This contribution is calculated on the basis of the vehicle's CO2 emission (in the absence of a known emission, it is set at 182 g CO2/km for petrol vehicles and 165 g CO2/km for diesel vehicles) according to the following formula:

For petrol vehicles: [(CO2 rate x EUR 9.00) – EUR 768.00] x 1,5948 / 12
For diesel vehicles: [(CO2 rate x EUR 9.00) – EUR 600.00] x 1,5948 / 12
For LPG vehicles: [(CO2 rate x EUR 9.00) – EUR 990.00] x 1,5948 / 12
For electric vehicles: EUR 33.22/month (or €37.33 for cars ordered from 1 July 2023)

The amount of the CO2 contribution is also indexed on 1 January each year. In addition, for petrol, diesel and LPG vehicles acquired from 1 July 2023, the contribution calculated in this way is multiplied by a factor of 2.25 from 1 July 2023, by a factor of 2.75 from 1 January 2025, by a factor of 4 from 1 January 2026 and by a factor of 5.5 from 1 January 2027. The aim is to create a disincentive for these CO2-emitting vehicles.

The CO2 contribution is due for each month in which a vehicle is made available to an employee, even if the employee has only used the vehicle for part of the month.

The company vehicle must belong to category M1 (passenger cars, combination cars and minibuses) or N1 (combination vehicles used to transport goods, trailers and commercial vehicles with a maximum mass not exceeding 3,500 kg). However, the NSSO makes a distinction between ordinary vehicles and commercial vehicles.

If the employee uses a commercial vehicle solely for commuting (with no other private use), the CO2 contribution is not due.

In the case of ordinary vehicles, commuting from home to a workplace that is not a fixed workplace are not considered to be a home-work commute.

A fixed place of work is defined by the following two conditions:

It is a place where the employee actually provides services on a certain scale (his own company, a worksite, a customer, etc.).
The vehicle is used for at least 40 days (consecutive or otherwise) over the year to travel to the same place. Once these 40 days have been reached for one location, the CO2 contribution is due for the whole year (possibly limited to the period during which the vehicle was made available).

When an employer provides a company car to an employee, the employee may sometimes acquire the vehicle at a reduced price after a certain period or at the end of the contract. In such cases, the difference between the car’s actual residual market value and the amount paid by the employee is considered a benefit in kind. This benefit is then included in the calculation of the employee’s remuneration and is subject to normal social security contributions. However, if the employee acquires the car at its actual residual value, there is no benefit in kind, and no additional social security contributions are due. It is important to note that the company's tax depreciation of the vehicle has no impact on the determination of its actual residual value.

Worker Taxations Description

The benefit arising from the private use of a company car is a taxable benefit in kind.

It is determined by applying a CO2 percentage to 6/7 of the catalogue value of the vehicle, which may not be less than EUR 820 per year (amount to be indexed; €1,650 for the 2025 income year).

Catalogue value of the vehicle × age coefficient × "CO2 percentage" × 6/7

The catalogue value is defined as the list price of the car as new offered for sale to a private individual, including options and the VAT actually paid, without taking into account any reductions, rebates or discounts.

In order to take account of the period elapsed since the date on which the vehicle was first registered with the Vehicle Registration Office, the catalogue value must be multiplied by an age coefficient determined as follows:

Period elapsed	% of the catalogue value
0 to 12 months	100%
13 to 24 months	94%
25 to 36 months	88%
37 to 48 months	82%
49 to 60 months	76%
From 61 months	70%

The CO2 base percentage is currently 5.5% for emissions of:

71 grams per kilometer for vehicles powered by petrol, LPG or natural gas;
59 grams per kilometer for diesel-powered vehicles.

These are the coefficients for 2025.

When the vehicle's CO2 emissions exceed these amounts, the basic percentage (5.5%) is increased by 0.1% per gram of CO2. However, the maximum percentage is limited to 18%. If the CO2 emissions are lower than these amounts, the basic percentage is reduced by 0.1% per gram of CO2 less, up to a minimum percentage of 4%. For vehicles for which no information on CO2 emissions is available, the rates to be applied are set at 205 grams / kilometer (petrol, LPG or natural gas) and 195 grams / kilometer (diesel).

The taxable benefit in kind is reduced by the employee's personal contribution to the cost of the company car (subject to certain conditions laid down by the tax authorities).

In order for the reimbursement of home charging costs for hybrid and electric company vehicles to be considered equivalent to the provision of a fuel card, the reimbursement of electricity charged at home must be based on the actual costs of the electricity used. For the year 2025, employers will be able to refer to the flat-rate tariff established by the CREG to process this reimbursement. A maximum amount per kWh will be set and published for each region on a quarterly basis.

At the end of the provision period, if the beneficiary of the company car purchases it for a price lower than its actual residual market value, the difference is considered a benefit in kind and is subject to taxation. No benefit in kind applies if the purchase price matches the actual residual value. The vehicle's tax depreciation is not relevant for determining the residual value when calculating this benefit in kind.

Employer Deductibility Description

For employer-companies, the deduction of expenses relating to the professional use of the company car is limited to a percentage that varies according to the vehicle's CO2 emission. The percentage of deductibility is determined according to the following formula:

120% - (0.5% × coefficient × CO2 emissions in g/km)

The coefficient is set at 1 for vehicles powered by a diesel engine, at 0.9 for vehicles powered by a natural gas engine and with a tax rating of less than 12 horsepower, and at 0.95 for vehicles powered by a petrol or other engine.

The rate determined by applying this formula cannot be less than 50% or more than 100%. However, the rate of deductibility is set at 40% when the vehicle emits 200 grams of CO2 or more.

On the other hand, expenses relating to the private use of the company car are fully deductible as remuneration, provided that it is included on the annual tax statements (failure to do so will result in the application of the special tax on secret commissions of 100%, which is not deductible as a professional expense for corporation tax purposes). Non-deductible car expenses may therefore be reduced by the benefit in kind calculated on a flat-rate basis.

However, 17% of the benefit in kind qualifies as a non-deductible expense and is subject to corporation tax. However, this percentage is increased to 40% if the employer covers (in whole or in part) the fuel costs associated with the use of the company car.

Lastly, the CO2 solidarity contribution can be considered as a social charge legally due and is therefore not subject to the deductibility limits applicable to car expenses.

For vehicles acquired no later than 31 December 2022, the current deduction system remains in force.

For plug-in hybrid vehicles acquired between 1 January 2023 and 30 June 2023, the deductibility method remains the same except for petrol and diesel costs where the deductibility percentage may not exceed 50%.

The 50% limit for petrol and diesel costs is extended to all vehicles acquired on or after 1 July 2023.

For vehicles acquired from 1 January 2026, only costs relating to the use of a zero-emission car will be deductible. In addition, the rate of deductibility will decrease over time:

Year of acquisition of the CO2 emission-free vehicle	Deductibility rate
2026	100%
2027	95%
2028	90%
2029	82,5%
2030	75%
From 2031	67,5%

In addition, from tax assessment year 2026 onwards, the deductibility of vehicles acquired between 1 July 2023 and 31 December 2025 is modified:

The minimum deductibility percentage of 40% applicable to vehicles emitting 200 grams of CO2 per kilometre or more is abolished.
The deductibility rate for vehicles for which no CO2 emission data is available from the Department of Motor Vehicles is increased to 0%.
The minimum deductibility percentage of 50% applicable to other vehicles is abolished.
The deductibility percentage for vehicles with CO2 emissions - obtained using the current deductibility formula - is capped and gradually reduced:

Income year	Maximum rate of deductibility
2025	75%
2026	50%
2027	25%
2028	0%

For vehicles that are used for both private and business purposes (mixed use), the deductible VAT must be determined on the basis of the percentage of professional use of the vehicles. The percentage of deductible VAT is determined on the basis of one of the following 3 methods:

Method 1: for each vehicle, the deductible VAT is determined on the basis of actual professional mileage. The following formula applies:

% deductible = [(Total number of kilometres - distance between home and workplace x 2 - private kilometres) x 100] / Total number of kilometres.

Method 2: The employer uses the following formula:

Private % = [(Home-work distance x 2 x 200 + 6,000) x 100] / Total distance.

Method 3: the deductible VAT is determined at a flat rate of 35%.

In any event, the deduction cannot exceed 50%, even if the professional use is greater than 50%.