CAR AND TAXES

Driving in a tax-efficient manner is becoming increasingly challenging, as vehicle taxes have tightened in recent years. While it remains possible, fewer individuals can benefit. If you drive an environmentally friendly vehicle, you may have previously enjoyed numerous tax benefits. These benefits have gradually diminished over recent years. Although more limited, some tax advantages still remain available in 2026.
 

Addition to income and private use

Since 2017, most new company vehicles used privately have incurred a standard addition of 22% of the vehicle’s list price. Only zero-emission vehicles qualify for a reduced addition. This discount applies from the month of vehicle registration and for the subsequent sixty complete months. After this period, the addition is recalculated annually based on the rates applicable at that time. In 2026, the following addition rates and CO₂ emission thresholds apply for new vehicles: Electric 18% up to €30,000 / 22% above, Hydrogen 18%, Solar cell 18%, Others 22%.

From 2028 onwards, there will be only one addition rate of 22%, removing advantages for zero-emission vehicles. In 2027, the discount on the addition will be reduced from 4% to 2% up to €30,000 of the list price. The addition can be fully avoided if you can prove you drove no more than 500 private kilometres annually. Commuting kilometres are considered business kilometres, even if you return home for lunch.
 

Youngtimer, MIA, motor vehicle tax and BPM

In 2026, the addition for private use of a vehicle first used sixteen years previously is 35% of its current market value—this is known as the youngtimer regulation. In 2025, this age limit was still fifteen years. From 1 January 2027, the youngtimer regulation age limit increases to 25 years without further transitional arrangements.

Hydrogen-powered passenger cars and vans qualify for a 45% MIA, covering up to 90% of the investment. Solar-powered passenger cars have a 36% MIA, up to 90% of the investment capped at €100,000. To claim MIA, report your investment to RVO within three months after the investment obligation arises.

For passenger cars with CO₂ emissions of 0 g/km, a 30% reduction on the standard MRB rate applies in 2026. For plug-in hybrids, no reduction will apply in 2026. As of 2025, there is no longer an exemption from BPM for cars with CO₂ emissions of 0 g/km. However, an exemption from BPM still applies to vans with CO₂ emissions of 0 g/km.
 

Pseudo-final levy from 2027 onwards

From 2027, a pseudo-final levy of 12% will apply within payroll tax. This 12% is payable by an employer if, from 2027 onwards, the employer makes a company passenger car available to an employee, which may also be used for private purposes, and which has CO₂ emissions greater than zero. The 12% pseudo-final levy is borne by the employer. It is an additional levy that the employer is not permitted to pass on to the employee. In addition, the taxable benefit for the company car borne by the employee will continue to exist unchanged in 2027.

An employer is not liable for the final levy if the passenger car has CO₂ emissions of zero or the company car is used exclusively for business purposes and not for private use. Whereas commuting is considered business use for the purpose of the addition for private use of a company car, these kilometres are regarded as private kilometres for the pseudo-final levy. As a result, from 2027 an employer may also be liable for the pseudo-final levy even if the employee does not use the passenger car for private purposes and therefore has no addition for private use.

Passenger cars that were already made available before 1 January 2027 will not immediately be subject to the pseudo-final levy from 1 January 2027. A transitional arrangement applies to these passenger cars until 17 September 2030. The 12% pseudo-final levy will be calculated based on the list value of the passenger car, including VAT and BPM. The pseudo-final levy is calculated per calendar month.
 

Conclusion

Despite the fact that the measure will only take effect in 2027 and a transitional arrangement applies, it is advisable to anticipate the measure now. This is particularly relevant if you are currently entering into, or intend in the future to enter into, a lease contract with a term of five years.

More information

For more information about this subject, you can read the advisory handbook.
 

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