Who benefits from the company car regime? Brussels, the 13 th of September 2017 Xavier May (ULB-IGEAB)
Cost/benefit for the employer-worker-state Bax analysis of the company car regime Benchmark = private car with flat-rate allowance for business trips Same consumption profile for the company car driver and the private car user In both cases, the net cost after deductions is the same for the company Average leased company car :VW Passat 1,6L diesel Bluemotion (105g CO 2 /km, price: 34 500, ABN: 2155 ) - married couple, 1 child - municipal tax: 7% - gross salary: 4500 (13,92 wage period) - annual mileage: 30 000km - home-work distance: 13 200 km (220 x 60 km) - business trip: 3 300 km (220 x 15 km) - leasing cost: 535 (VAB excluded) over 4 years - corporate tax: 33,99% - fuel card paid by company - diesel price: 1,1 (VAB excluded) - fuel consumption: 6 L/100km - flat-rate allowance for business trips: 0,346 /km - car cost price: 0,2747 /km (< AutoGids) - personal income tax 2017 (income 2016)
Employer cost Bedrijfswagen Eigen wagen Brutosalaris 62 640 70 157 Kostenvergoeding 1 142 CO2-bijdrage 431 RSZ werkgever 32l 18 720 20 966 Leasekost (BTW excl.) 6 420 Brandstofkosten (BTW excl.) 1 980 Niet recupereerbare BTW (lease + brandstof) 1 147 Totale brutokost werkgever 91 337 92265 Vennootschapsbelasting op aftrekbaar deel kostenvergoeding Vennootschapsbelasting op aftrekbaar deel salariskost -27 654-30 973 Vennootschapsbelasting op aftrekbaar deel beroepskosten auto -2 765 Netto loonkost werkgever 60 918 60 960 Botal cost company car (before deductions, VAB included): 10 595, fiscal deductions: 2 765, real cost for the company: 7 212-332
Employee benefit Bedrijfswagen Eigen wagen Winst Brutosalaris 62 640 70 157 Voordeel van alle aard bedrijfswagen 2 155 Totaal bruto werknemer 64 795 70 157 RSZ bijdragen -8 146-9 123 Personenbelasting -20 640-22 949 Bijzondere bijdrage RSZ -620-620 Neutralisatie voordeel van alle aard -2 155 Kostenvergoeding 1 142 Netto stltris werknemer 33 234 38 607-5 373 Jaarlijkse kost eigen wagen -8 241 Netto in htnden 33 234 30 366 2 868 Cash for car: 5 914 but taxation on the benefit in kind (50% of 2 155 ) less interesting
Fiscal loss of earnings CO2-bijdrage 431 Bedrijfswagen Eigen wagen Verlies RSZ werkgever 32l 18 720 20 966 Niet recupereerbare BTW (lease + brandstof) 1 147 BTW op brandstof 416 Vennootschapsbelasting op aftrekbaar deel kostenvergoeding Vennootschapsbelasting op aftrekbaar deel salariskost Vennootschapsbelasting op aftrekbaar deel beroepskosten auto -332-27 654-30 973-2 765 RSZ bijdragen 8 146 9 123 Personenbelasting 20 640 22 949 Bijzondere bijdrage RSZ 620 620 Totttl 19 285 22 769 3 486 Estimate of the fiscal burden of the company car regime: 3 486 x 625 000 2 175 000 000 Bhese results are sensitive to the estimate of the cost price per km, the kilometers traveled and the type of company car
Implications of the company car regime Bhe more you drive private trips (home to work distance, personal trips), the more the company car is interesting for the worker Bhe more you travel on business trips, the less the company car is financially advantageous for the worker Bhe more expensive the company car is, the more the company car regime is advantageous for the worker Bhe fuel card is attractive for both the worker and the company: 100 given to the worker cost 70 to the company Bhe conversion of the company car into cash is more advantageous than what is often said. In this case, the beneficiary could receive about 450 monthly in cash Bhe benefit in kind greatly underestimates the real value of the advantage for the worker (annual car cost: 10 600, benefit in kind: 2 155 )
Fiscal fairness of the company car regime Verdeling van bedrijfswagen naar inkomensdecielen (2013) 60% 50% 51l 40% 30% 20% 10% 0% 21l 11l 5l 6l 0l 1l 1l 1l 2l 1 2 3 4 5 6 7 8 9 10 Inkomensdecielen Bron: database van het SIRe-model van de FOD Financiën Bhe company car regime is a benefit in kind that lowers taxation on high incomes
Fiscal fairness of the company car regime Horizontal equity: different levels of taxation depending on whether you are paid in kind or in cash (for personal income tax and for social security contribution) Vertical equity: company car regime reduces tax progressivity (for personal income tax and for social security contributions) Company directors pay less taxes than employees because they do not pay the CO 2 social security contribution 2 mechanisms are problematic within the regime: Bhe fuel card allows a negative taxation: 100 given to the employee for private trips cost 70 to the employer Bhe more expensive the company car is, the more the company car regime is advantageous for the worker: if you double the value of the car, you slightly increase the amount of tax to pay for the worker
Comparison with other modes of transport Employers' interventions for other modes of transport only cover the home to work journey 1 200 1 000 Werkgeverstegemoetkomingen in de kosten van het woon-werkverkeer (loontrekkenden uit de privésector) 1 008 800 654 600 400 361 383 435 479 200 0 Fiets Tram-busmetro Gemeenschappelijk georganiseerd vervoer Privéwagen Trein Derdebetalersovereenkomst (NMBS) Bron: Centrale Raad voor het Bedrijfsleven
Conclusions Bhe company car is advantageous for both the employer and the worker but entails a significant tax shortfall. For the worker, the tax benefit of the company car regime is based on a benefit in kind which is much lower than its real value and on the absence of social security contribution For the company, the tax benefit of the company car regime is due to a low flat-rate social security contribution (CO 2 ) (no social security contribution for company directors) Bhe company car regime raises serious questions about tax fairness