Finally more clarity on the horizon for employers who reimburse home charged electricity?

The world of car taxation has been experiencing one change after another for several years.

Yesterday, Minister of Finance Vincent Van Peteghem announced in parliament that his Administration is working on a circular letter that, although only temporary, would remove a lot of uncertainty for both employees and employers regarding the reimbursement of electricity used for home charging.

The position of the Minister and his Administration has remained unchanged for years. Reimbursement of the electricity used for charging can only be based on the actual costs. This posed enormous practical and administrative challenges for employers. While it is relatively simple to determine the kilowatts used to charge a car, the price of those kilowatts depends on various factors, making the determination of the exact amount reimbursable by the employer an almost impossible task.

This resulted in a pragmatic approach where most employers, and contrary to the Minister’s position, used a reimbursement based on a lump-sum rate per kilowatt.

In response to a parliamentary question, the Minister confirmed the forthcoming of a circular letter, in which the following points will be outlined:

• The basic principle that reimbursement of costs proper to the employer must be based on actual costs remains intact. This system is considered by the Minister to be the fairest for all employees, and it also ensures that no new tax optimization techniques arise.
• Accurately measuring the actual costs is difficult but not impossible. The Minister will explicitly accept the existence of a submeter with a separate electricity contract, which makes it possible to measure the exact costs.
• Pending further technological developments, the Administration has the intention to temporarily allow the use of “a specific CREG tariff”. This rate will be carefully selected to provide balanced compensation and ensure equal treatment of each employee. How this “specific CREG tariff” should be interpreted remains unclear for the time being.

Finally, the Minister acknowledges the importance of greening the vehicle fleet as a crucial element in the sustainability transition. For this reason, it is equally important, in our view, to offer practically workable solutions and not get entangled in administrative complexities.

Despite the Minister’s positive intentions, many questions remain unanswered for the time being. For example, it is unclear how the ‘specific CREG tariff’ will be calculated, what the implications are for people with solar panels, where bidirectional charging is possible and whether this approach can be applied retroactively.

Therefore, we must await the new circular letter and any further clarification from the Minister himself. We will, of course, continue to closely monitor further developments on this matter.

If you have any questions or comments regarding this issue, please do not hesitate to contact Bart Van den Bussche or your regular PwC contact person.