Car taxation year 2025: update key ground rules
May 2025 - The rules of the game regarding car taxation in Belgium are in a state of flux. Since 2023, the federal government in our country has been strongly committed to greening the car fleet, and as an entrepreneur, you feel this more and more in your wallet. In 2025, the tax rules will be even stricter.
Electric cars remain the spearhead, but unexpectedly, there is also room again for plug-in hybrids. What exactly will change, and how do you best anticipate this as an SME? We list it clearly.
1. Tax deductibility: electric remains king
The tax authorities are increasingly looking at the ecological performance of your car. In other words, the less CO₂ emissions, the more you can deduct from your car expenses. Electric driving, therefore, remains the gold standard.
Fully electric cars (EVs) are still 100% tax deductible, and will remain so until the end of 2026. For many companies, this is a clear reason to make the switch. Especially as the range of EVs is getting wider, with more affordable models as well.
Hybrids, which combine an internal combustion engine with an electric drive, have become less attractive from a fiscal point of view. Already since 2023, the fuel costs of these cars are only partially deductible.
Classic petrol and diesel cars (including plug-in hybrids) are systematically penalised. For vehicles you purchase after 1 July 2023, tax deductibility drops year on year. By 2026, tax benefits for this category will disappear completely for new purchases.
2. Plug-in hybrids: comeback with conditions
A striking turn of events in 2025: the federal government has decided to give plug-in hybrids a bit more breathing space on the tax front again. Why? Because many self-employed people and SMEs still experience barriers to the full switch to electric, such as too limited charging infrastructure or driving anxiety over long distances.
What exactly will change?
Tax deductibility will be stabilised at 75% for plug-in hybrids that meet certain conditions. Those percentages will remain valid throughout the vehicle's useful life.
Fuel costs will again be 75% deductible, provided the vehicle has a sufficient electric driving range and is effectively used (mostly) electrically.
From the end of 2025, carmakers will have to retest the CO₂ emissions of their hybrid models using a more stringent measurement method. Consequence: models with small batteries are likely to be excluded from the favourable tax regime.
For SMEs that do not want to change their mobility policy all at once, this means that plug-in hybrids are again a viable interim solution. Especially in combination with sensible use - i.e. charging and driving electric as much as possible.
3. VAA (benefit in kind): electric remains advantageous
For those who provide company cars to employees, the benefit in kind (VAA) is still a concern. This determines how much tax your employee pays on the private use of the car.
Electric cars have a significant advantage here: due to their zero emissions, the SG&A amount is a lot lower than for classic or hybrid models. This means a lower tax burden for your employees and thus an additional argument when attracting or retaining talent.
Although the catalogue value obviously plays a part in the SG&A calculation, EVs in the cheaper segment are also becoming increasingly interesting.
4. Mobility budget: alternative on the rise
The classic company car has long since ceased to be the only way to organise mobility. More and more companies are opting for the mobility budget as a flexible alternative.
It allows employees to choose how they travel: from an electric bike to public transport, shared cars or a smaller company car. The big advantage? The mobility budget is fiscally advantageous and perfectly in line with sustainability objectives.
For SMEs, it is also a way to become more attractive on the labour market, especially among younger profiles who attach great importance to freedom and environmental awareness.
5. Leasing and TCO: think beyond the purchase price
Leasing companies are also closely following the trends. In 2025, you will clearly see that electric cars are more often in the lease portfolio, and that the total cost of ownership (TCO) will become increasingly competitive compared to conventional cars.
When entering into a new lease contract, as a business owner you should take into account:
The residual value of the car: EVs are increasingly retaining their value, especially with popular brands.
Charging infrastructure: will it be charged at home or at the office? This makes a big difference in ease of use and cost.
Energy costs vs. fuel costs: electricity is often cheaper, but prices can fluctuate. A smart charging strategy can make all the difference.
