Benefits in kind
Employees who use a company car for private purposes enjoy a benefit in kind (BIK). Changes to the calculation of the BIK from 01/01/2012:
Employee
What are the new rules?
Instead of a regulation that only takes account of the CO² emission and the distance between the home and the workplace, the new formula will be based on the CO² emission and the catalogue value of the car, and no longer takes account of the commuting distance. It is important to know that the tax is based on the catalogue value including VAT and the cost price of the optional extras. No account is taken of any discount that is obtained on the purchase price.
Calculation of benefit in kind
For the calculation of the monthly taxable benefit for the employee, from 2012 a new formula applies, consisting of the catalogue price and the CO² percentage of the car, and a correction factor.
The new law defines the catalogue price as follows: the catalogue price of the vehicle in new condition upon sale to a private individual, including optional extras and actual paid tax on the added value without accounting for any discount, reduction, rebate or refund.
As from the 1st of May, the formula for calculating the benefit in kind is as follows:
6/7 x ((net catalogue price x 1.21) + discount) x CO2 coefficient
Until then, this formula applies:
6/7 x ((brut catalogue price x 1.21)) x CO2 coefficient
Example:
A (diesel) car including options and accessories costs € 30,000.
A discount is given on this of € 4000 in total. The CO2 emission is 136 gr.
Calculation of the BIK
= 6/7 x ((€ 26,000 x 1.21) + € 4000) x 0.096
= € 2917.85 per year or € 243.15 per month
The monthly taxable benefit may never amount to less than 100 EUR.
The amount the employee will eventually pay for his company car is strongly dependent on the company’s car policy. If the employee does not have to pay a contribution for the use of the company car, he is taxed via his income tax on the full taxable benefit as calculated above. If he pays a monthly contribution, this is deducted from the calculated taxable benefit.
The new rules may have a disappointing effect for employees who in previous years opted for an economy model. Employees often received additional funding for optional extras if they chose a car with lower CO² emission. Now, however, those options are included.
The age of the car is taken into account
Both for new and second-hand cars, when calculating the gross catalogue value, account must be taken of the original catalogue value and the age of the car. In the first year the formula will account for the original gross catalogue value, and every subsequent year the gross catalogue value will reduce by 6%.
Therefore, whether it concerns a new car or a second-hand one, both will be taxed in the same way as regards benefit in kind. And a driver who continues driving the same car will see his benefit declining year upon year.
The age should be calculated from the date of the car’s first registration. To calculate the 'reduction percentage' a period of 12 months is taken into account (not a calendar year). For a car which has been in use longer than 12 months (from first registration), the gross catalogue value will be reduced by 6%. Longer than 24 months, reduced by 12%, and so on.
Employer
The new regulation stipulates that from 2012 employers must register a percentage of the benefit in kind on the company car as (additional) 'non-deductible expenses'.
This taxable part is set at 17% of the benefit in kind.