The matter of reimbursing home charging costs (by employers to their employees) for electric company cars has been surrounded by uncertainty for quite some time. Fortunately, a new circular letter (that was already announced in September 2024 by the Minister of Finance Vincent Van Peteghem) finally provides clarity… for now.
As previously outlined, Belgium’s ‘green’ policy on company cars has resulted in a significant influx of electric vehicles to the Belgian fleet market. When employers provide company vehicles to employees, many choose to also cover the related fuel costs. For fossil fuel-powered cars, this is simply done through a fuel card, which employees can use at public fuel stations. If the employer provides employees with a fuel card, this is deemed to be part of the benefit in kind for personal use of a vehicle provided free of charge, and will thus not be taxed separately. There is no doubt that this is also the case when (as stipulated in the applicable car policy) an employer provides an electric company car to the employee accompanied by a charging card which can be used at a public charging station or when the employee can charge this vehicle for free on the premises of the employer. Indeed, no additional benefit arises in relation to the corresponding charging costs which are borne directly by the employer. Indeed, the employer is not only providing the “wheels”, but also the “electricity” needed to power them. One single taxable benefit in kind covers it all.
But what about home charging? This is where things get complicated. Indeed, contrary to fossil fuel vehicles, EV’s can be also easily charged at the home location of the employee, with the right charging equipment. What if the employer decides to reimburse the employee for the home charging electricity costs? The electricity is then first invoiced to the employee, who pays the bill to the energy supplying company. Afterwards, the employer reimburses these electricity expenses (fully or partially) to the employee. In principle, this triggers a separate benefit (notably when it is related to privately driven kilometers), which is ‘as such’ not included in the lump-sum determined taxable benefit for the private use of an electric company car, because it is strictly speaking a reimbursement of (private) electricity (costs) by the employer and thus not the actual provision of electricity… Potato potato? Electricity is electricity?
However, in practice, there is an exception (or tolerance) to the abovementioned principle of the taxable benefit in kind for “reimbursed electricity”. Indeed, in the past the Minister of Finance already stated that the reimbursement of home charging costs will not trigger an additional taxable benefit in kind in the hands of the employee, if the specific conditions are met:
The charger or electric charging station (for which the electricity costs are being reimbursed to the employee) can be provided directly by the employer or it can be a home charger which is privately acquired / owned by the employee. If the abovementioned conditions are met, there will only be the lump-sum valued benefit in kind for the company car.
Principle: taking into account the above, both the Minister of Finance and the Belgian Ruling Commission uphold the principle that reimbursements for charging costs must be based on the actual electricity expenses incurred by the employee.
Problem: determining the actual electricity cost for every home charging session for an EV is far from easy, because there are many parameters involved. In practice, this leads to a significant administrative burden for employers and employees. From a practical perspective, investigating this for every employee (cfr. types of electricity contracts, various cost structures, potential impact of solar panels and home batteries, etc.) would not just become “mission difficult” but it would be “mission impossible”.
Solution: as stipulated in the circular letter 2024/C/77 of 5 December 2024 (see below), it is accepted that for the calculation of the actual electricity costs, one may use a fixed amount per kilowatt-hour (kWh), provided that this fixed amount per kWh does not exceed the CREG tariff.
Minister of Finance Vincent Van Peteghem recognises that, while in principle the ‘actual costs’ rule applies, it is currently not feasible for many companies to reimburse actual charging costs on an individual basis, because of technological limitations in measuring power usage from home charging stations and the administrative burden this would impose both for the employee and employer. To remedy this, the Minister has now introduced a specific tolerance to the ‘actual costs’ principle.
In this respect, making use of a standardized flat rate per kWh to calculate the actual electricity costs will be allowed, but only on the condition that this fixed amount per kWh does not exceed the ‘CREG tariff.’ The CREG is the Belgian Federal Commission for Electricity and Gas Regulation. This national authority publishes an average electricity tariff which is adjusted periodically and varies per region in Belgium.
This CREG tariff (which is in practice already used for the reimbursement of home charging electricity costs) will enable employers to reimburse employees for charging costs at a fixed rate, eliminating the need for a complex and excessive administration. However, it does still imply that the employer needs to know the exact electricity usage for the home charging sessions per employee.
The maximum fixed rate per kWh is determined quarterly per region, based on the employee’s place of residence. Consequently, only 4 times per calendar year a maximum fixed amount per kWh will be determined per region.
In a first step the rate (per kWh) is calculated based on the average commercial electricity price all-in price, on the retail market for residential customers with a household with digital meter, an electric vehicle, a usage of 8.000 kWh/year and an average monthly peak of 7,36 kW, as published by the CREG in its board table on its website for that particular month. The all-in electricity price includes the price of energy, network costs (transmission/transport and distribution), levies and surcharges and VAT.
On that basis, the maximum fixed amount per kWh for the relevant quarter is determined as follows:
The employer can reimburse the used electricity, without exceeding the maximum fixed amount per kWh as established above, taking into account the region of the employee’s residence. Of course, the employer can decide to reimburse less than this regional maximum amount. The employer can also choose to reimburse electricity without taking into account the residence of its employees. In such a case, the maximum regional flat rate per kWh, as defined above, is equal to the lowest tariff applicable in one of the regions (i.e. lowest regional rate for all employees) for the respective quarter. This choice applies to the entire calendar year.
For the first quarter of 2025, the maximum fixed tariffs by region amount to:
Future rates will be published by the Belgian Tax Administration by means of an addendum to the circular letter 2024/C/77.
Time limitation: This administrative tolerance (which not only allows reimbursement of electricity costs for home charging, but additionally also allows the use of the CREG tariffs when doing so) is essentially intended as a temporary solution until technological advancements allow for a more precise determination of electricity costs for charging at home. This tolerance will remain in effect until the 31st of December 2025, encompassing the reimbursement of electricity expenses with respect to the period from 1 January 2025 up to 31 December 2025 (even when reimbursed after 31 December 2025). In principle, the administrative tolerance will thus no longer be effective as of 1 January 2026, unless the Belgian Tax Administration would deem that there is a need to extend the tolerance in function of the technological progress of the systems which will then be available. The reimbursement of home charging electricity costs relating to the period prior to 1 January 2025, will be assessed by the Belgian Tax Administration with a certain flexibility, when such reimbursements have been made in good faith using the board table of the CREG.
There is another point which is also worthwhile mentioning here. In the practice note it is stipulated that when, in addition to a company car, an employer also makes available to its employee a charging station which is installed at the employee’s home, and at the end of that provision ownership of the charge point is transferred to the employee free of charge, then this transfer of ownership in principle gives rise to the taxation of a benefit in kind in the hands of the employee, which is based on the actual value of the charging station. What the residual value of that charging station is in the hands of the employee at the time of the transfer of ownership, however, is a factual matter, and thus must be determined on a case-by-case basis.
Via this circular letter (which is generally well received) the Belgian Tax Authorities seek to clarify the income tax treatment in case of reimbursement of electricity costs by the employers towards their employees in relation to the charging of electrified (company) cars at home and to remove the remaining uncertainty that exists about the taxation of home charging of EV’s. The tax treatment of the reimbursement of electricity costs for charging a company car at home, applies mutatis mutandis also to company directors.
By allowing the use of the CREG tariffs, the Belgian Tax Authorities substantiate the current practice which is often already used by employers. However, it is important to note that it concerns an administrative tolerance which is limited in time. It can be extended (if needed) or revoked (if no longer needed) depending on the technological developments in the future. The end game will thus be to determine the actual electricity cost that is being reimbursed by the employer.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Nic Boydens
Partner
Philip Maertens
Partner
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