The private use of a company car is a common benefit offered by employers in Belgium. However, this so-called "benefit in kind" (VAA) has tax implications. For employees who have a company car, it is important to understand the tax implications.

Although the VAA for company cars is an oft-discussed topic, the exact workings remain unclear to many employees. In this article, we discuss how the SG&A for a company car is calculated in 2024 and how it affects your take-home pay. Do you have questions such as: How is the SG&A calculated? What does it cost for me? Is it subject to withholding tax? Then read on!

What does the benefit in kind (VAA) mean for a company car in 2024?

Benefit in kind (VAA) refers to tax on the private use of a company car. It is considered a form of additional income, as private use - such as commuting - is considered a reward for tax purposes. This means you pay company withholding tax on the VAA amount, as it is considered a taxable benefit.

The VAA is calculated based on factors such as the catalogue value, fuel type and CO₂ emissions of the car. This data determines the amount that qualifies as VAA.

How does the SG&A appear on your payslip?

The SG&A is listed on your pay slip as "taxable benefit" and affects the withholding tax deducted from your pay. The SG&A is added to your taxable income, which means you pay more withholding tax and therefore receive less net pay.

How is the SG&A calculated?

To calculate the VAA, we look at the catalogue value of the car, its age and CO₂ emissions. The calculation in 2024 is as follows:

SG&A = catalogue value x age coefficient x CO₂ coefficient

The catalogue value, including options and VAT, is the basis for this calculation. As the car gets older, the value decreases due to an age-related correction. Hybrid and electric vehicles typically have a lower CO₂ coefficient, resulting in a more favourable SG&A.

The SG&A is calculated from the first day of the month in which the car becomes available, regardless of the exact date.

Example: Tom will get a company car on 28 November 2024. The SG&A for this car is €340 per month. Although he only uses the car for a few days in November, the full SG&A of €340 is applied for that month.

Reduction of taxable benefit with a co-payment

It is possible to reduce the SG&A by paying a co-payment. This amount is deducted from the calculated SG&A, lowering the taxable benefit.

Factors determining benefit of all kinds

The SG&A for commercial vehicles is influenced by several factors:

• Catalogue value: The new price of the car, including options and VAT.
• CO₂ emissions: Comparison with a reference value set annually.
• Car type: Engine variants such as petrol, diesel, hybrid or electric are treated differently for tax purposes.
• Age of the car: The value decreases as the car ages due to progressive degressivity.

What is the impact of the SG&A on your take-home pay?

Because the SG&A is added to your taxable wage, you end up paying more tax, which reduces your net wage. A higher catalogue value or CO₂ emissions of the car results in a higher SG&A, and thus less net wage.

Why distinguish between private and professional use?

The law distinguishes between private and business use, with only private use being taxable. Company cars are often also used for business travel, but when the car is also available for private purposes, such as commuting, this counts as a taxable benefit.

Who has to prove the private use of the car?

The responsibility to prove the private use of a company car lies with the employer. This can be done, for example, through contractual agreements or company rules. During a tax audit, these documents can serve as evidence.

What does the "progressive degressivity" of the catalogue value mean?

Progressive degressivity means that the catalogue value of the car decreases according to a set percentage each year. This decreasing value reduces the SG&A as the car ages, resulting in a lower taxable amount.

Tax impact of a company car for private use

The private use of a company car has tax consequences. For the employee, it results in higher withholding tax and possibly lower net wages. The employer may also have additional administrative costs and social charges. Sometimes, an employee's own contribution is also required to reduce the SG&A.

A conscious choice of company car, such as a hybrid or electric variant, can help both employer and employee reduce the tax impact.