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New tax regime 2020: the impact on plug-in hybrids

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2020 will be marked by a new tax regime for company cars. In this article, Athlon zooms in on the consequences for plug-in hybrid vehicles.

A completely new and much more complex tax regime will be introduced for company cars in 2020. In particular, the rules for plug-in hybrids are becoming stricter in order to avoid favouring some models that are considered to be ‘false hybrids’.

New formula

The tax deductibility of plug-in hybrids will be calculated using a new and much more complex formula as from 2020, just like that of cars that run purely on fossil fuel. This applies to newly registered vehicles as well as to second-hand vehicles and vehicles that are already in use. For plug-in hybrids, the formula applies to petrol or diesel. In many cases, this will make the deductibility of company cars much less attractive. 

Minimum battery capacity

Nothing will change for plug-in hybrids that were registered before 1 January 2018. There are no new, stricter conditions for full hybrid cars (self-charging) either. If a plug-in hybrid was registered after 1 January 2018, three variables will apply from 2020 to calculate the benefit in kind (BIK): 

  • the CO2 emissions

  • the weight of the vehicle in drivable condition

  • the minimum capacity of the battery

That last factor is new. This is the gross capacity of the battery: this is the operating capacity (net capacity) supplemented by a small reserve capacity in order to safeguard the quality of the battery and not to damage it. These data do not yet appear in the vehicle’s approval documents, but the dealers and importers do have this information. 

The gross capacity determines whether it is a real or a false plug-in hybrid. With real plug-in hybrids, the ratio between battery capacity and vehicle weight is 0.50 kWh per 100 kilograms. In addition, CO2 emissions must not exceed 50 grams per kilometre. To calculate this ratio, the weight of the driver and the fuel are also taken into account.

False hybrids

If the capacity of the battery is less than 0.50 kWh per 100 kilograms or if the CO2 emissions are higher than 50 grams per kilometre, then it is considered a false hybrid. 

False plug-in hybrid company cars that will be part of the fleet from 1 January 2018 will become more expensive for both employee and employer from 2020. This is because the BIK is calculated on the basis of the CO2 emissions of the corresponding fossil fuel vehicle. That corresponding vehicle:

  • has an engine that uses the same fossil fuel

  • is of the same make, model, and chassis type

The car manufacturer or importer is obliged to determine the corresponding vehicle and to provide the FPS Finance with the necessary technical information. The latter publishes an updated, purely informative list of corresponding vehicles on its website. 

If no vehicle meets these requirements, the CO2 emissions of the hybrid vehicle are multiplied by a factor of 2.5.

More information about the new car tax regime can be found in our free white paper. Or contact our Strategic Consulting Manager Frédéric Denies to help you define your mobility trajectory for the coming years and to take the decisions that best suit your company.

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