New Legislation: Reimbursement of Electricity Costs for Charging Company Cars

For both employers and employees, it’s crucial to understand the difference between the free provision of electricity and the reimbursement of electricity costs for charging company cars. These nuances can make a big difference in how they are taxed.

Free provision or reimbursement?

When it comes to the free provision of electricity, the employer directly pays the energy supplier on behalf of the employee, for example, through a charging card or by charging the company car on the company premises. This is considered a benefit that is included in the car’s lump-sum benefit in kind, and no additional taxable benefit is established.

However, in the case of reimbursement of electricity costs, the employee pays the costs and is then (partially) reimbursed by the employer. This constitutes a separate benefit that is treated differently for tax purposes based on the nature of the trip. The reimbursement of electricity costs strictly for professional trips is considered a non-taxable reimbursement of the employer’s own costs. The employer must, however, keep the necessary evidence to demonstrate that these costs are theirs.

On the other hand, the reimbursement of electricity costs for private trips (such as commuting) is considered the reimbursement of personal electricity costs. This results in an additional taxable benefit on top of the car benefit.

Exception based on circular 2024/C/77

An important aspect of the new legislation is that the reimbursement of electricity costs by the employer may, under certain circumstances, be equated to the more tax-efficient free provision of electricity. This means that the reimbursement does not constitute a separate taxable benefit, but is included in the lump-sum benefit of the company car. To benefit from this favorable tax exception, four conditions must be met:

1. The Employer Provides a Charging Station
   The employer must provide a charging station for the employee. However, this is not an absolute condition; an employee who already owns a charging station may continue to use it.
2. The Charging Station Has a Communication System
   The charging station must be equipped with a specific communication system that reports the consumption of electricity for the company car’s charging directly to the employer. This provides the necessary transparency to ensure that the reimbursement only applies to electricity used for the company car.
3. Clear Provisions in the Car Policy
   The employer’s car policy must explicitly include the reimbursement of the “charged” electricity costs via the charging station.
4. Reimbursement Based on Actual Electricity Costs
   The reimbursement must be based on the actual electricity costs. However, this can be extremely complex due to factors such as day and night rates, types of energy contracts, the presence of solar panels, etc.

To reduce this complexity and the significant administrative burden, an administrative tolerance is allowed. Employers may calculate the actual electricity costs based on a fixed amount per kWh, provided that this amount does not exceed the maximum allowed CREG rate. This rate will be determined separately each quarter for the three regions. The applicable region will be based on the employee’s place of residence. For example, for the first quarter of 2025, the rate in the Flemish Region will be 28.22 euro cents per kWh. The fixed rate offers a practical solution that significantly reduces the administrative burden for both employers and employees.

What does the future hold?

Although this measure offers an attractive solution, it is important to realize that this administrative tolerance will only apply temporarily. The measure is valid until December 31, 2025. After that date, the government will review the situation and may introduce new regulations.

Our experts are here to help

If you would like more information to take the necessary steps now to comply with the conditions and administrative requirements of this scheme, feel free to contact us. This way, you will not only remain compliant but also save time, costs, and worries.