Total Cost of Ownership
Which company vehicle suits you?
A company car might seem like an obvious choice, but behind that shiny new vehicle lies a complex calculation. The Total Cost of Ownership (TCO), or the total costs of a vehicle, encompasses more than just the purchase price. This goes far beyond the monthly lease payment alone. After all, there are numerous factors to consider. These include tax burdens, fuel costs, and the eventual residual value.
Do you really want to know which car best suits you in this ever-changing automotive landscape? In this article, we'll examine all the costs and benefits so you can make a considered and smart choice after reading this.
In this article, we break down the most important changes found in the Flemish governing accord for you, and what you can expect from the new Flemish government. So, if you have questions but don't fancy reading the entire governing accord? Don't worry, we've summarised it for you! Below are all the matters of importance to you as an entrepreneur.
Still have questions after reading this article? Contact us and we'll be happy to help, so you can be driving your dream car soon.
The pros and cons of a company car
A company car is an attractive option for many employees and employers. Indeed, according to Fleet (2024), 14.71% of employees in Belgium have a company car. This figure is higher on average than in our neighbouring countries.
The monthly lease payments and annual rent can (partly) be borne by the company, but there are also tax burdens and other costs that need to be taken into account.
Below we list the main advantages and disadvantages of a company car.
The benefits
Tax deductibility
The actual costs of an environmentally friendly company car can largely be deducted, depending on the CO₂ emissions. The deductibility is calculated using a formula, which is more favourable for low-emission vehicles.
Professional fees
Certain costs such as maintenance, insurance, and tyres can be offset through the company.
Limiting private spending
An employee has to pay less out of their own pocket for commuting.
The disadvantages
VAT on private use
You pay a benefit-in-kind (BIK) on your company car, as this is considered part of your remuneration. The flat-rate valuation formula determines the tax on BIK for private use. This is also more advantageous for an environmentally friendly company car.
Administration
The lease contract and the financing incur additional management costs. It is also a hassle to process this correctly in the accounts, for example, regarding deductibility, and so on.
Low deductibility for high CO₂
With a car that has high CO₂ emissions, you can only benefit from very limited deductibility. So, if you're a fan of 'polluting' fast cars, this will lead to many disallowed expenses. The non-recoverable VAT and disallowed expenses therefore represent an additional cost for the employer.
Wat is de TCO van een bedrijfswagen?
The car TCO stands for Total Cost of Ownership of a vehicle, i.e., the total costs of a vehicle throughout its entire lifespan. A car may be cheap to purchase but can prove expensive over its entire lifespan.
De Total Cost of Ownership bestaat uit de volgende onderdelen: * **Aanschafkosten:** Dit zijn de directe kosten die gepaard gaan met het kopen of verkrijgen van een product of dienst. Denk hierbij aan de aankoopprijs, installatiekosten, transportkosten en eventuele licentiekosten. * **Operationele kosten:** Dit zijn de kosten die gemaakt worden tijdens het gebruik van het product of de dienst. Dit omvat onder andere energieverbruik, onderhoud, reparaties, verbruiksartikelen en personeelskosten. * **Afschrijvingskosten:** Dit is de waardevermindering van een actief over tijd. * **Beëindigingskosten:** Dit zijn de kosten die gemaakt worden aan het einde van de levensduur van een product of dienst. Dit kan gaan om ontmanteling, recycling, verwijdering of de kosten van het migreren naar een alternatief.
The TCO includes:
- PurchaseThe catalogue price and preparing the car for delivery. The ‘cost price’ shown on the advertisement.
- Lease financingMonthly lease price or costs of financial leasing. This is an important difference. With operational leasing, this is treated as an expense in the accounts, whereas with financial leasing, it appears on the balance sheet.
- Taxes and contributionsRoad tax and non-deductible VAT.
- Fuel and electricity costsFuel costs (diesel, petrol) for a petrol or plug-in hybrid car and electricity costs for an electric car.
- Maintenance and repair costsIncluded in certain contracts or included as a separate charge. This is agreed upon in advance when signing the lease. In most cases, ‘all-in’ leasing is chosen. This means that insurance and maintenance are included.
- Salvage valueThe expected residual value at the end of the lease contract.
A TCO calculator is a tool used to determine the total cost of ownership of a product or service over its entire lifecycle.
A TCO calculator is a tool that allows employers and employees to determine the cost price of a vehicle based on total costs and not just the catalogue value.
To make things a little easier, we've already listed a number of popular company cars and calculated their costs. We'll list three of them below.
Volvo EX30
This is a company vehicle that has gained a lot of popularity because it is produced in Belgium. This vehicle does not have a high leasing cost and has a large range. So, ideal if you don't want to have too many monthly car costs.
Mercedes EQB
The Mercedes EQB is a spacious and versatile electric van that's ideal for entrepreneurs who value comfort and technology. With a premium interior, a driving range of approximately 420 km (WLTP), and an advanced infotainment system, this vehicle offers both practicality and luxury.
Porsche Taycan
Some people prefer luxury and prestige. In that case, the Porsche Taycan is the ideal company car. It should therefore be no surprise that the costs of this vehicle are high. You have to be willing to pay for it.
Which commercial vehicle to choose?
When choosing a company car, company policy and tax deductibility must be taken into account. This means that factors such as CO₂ emissions and the age of the car play a role.
An environmentally friendly company vehicle, such as a plug-in hybrid or an electric car, offers significant tax advantages. These advantages have been further strengthened by the measures in the recent coalition agreement.
New coalition agreement: longer transition period for hybrid cars
The Belgian government has introduced a longer transition period for plug-in hybrid cars, meaning certain costs and tax rules will remain temporarily favourable:
- Until the end of 2027: 75% tax deductibility (previously until the end of 2025).
- Until the end of 2028: 50% tax deductibility (previously until the end of 2026).
- Until the end of 2029: 25% tax deductibility (previously until the end of 2027).
This extension applies exclusively to hybrid vehicles with CO₂ emissions of less than 50 g/km. Models with higher emissions are not eligible for this scheme.
A comparison of the most popular electric cars
The choice of an electric car is becoming increasingly attractive due to lower running costs, higher tax deductibility, and lower management expenses. Brands such as Tesla, BMW, and Volkswagen offer popular models with varying list prices and residual values. When calculating the total costs, consideration must be given to non-recoverable VAT, financing, and contract terms.
By mapping out the TCO properly, both employers and employees can make an informed decision when determining the right company car. We have therefore mapped out the TCO of a number of popular makes to give you a better idea of how much they can differ.
Do you have any further questions about the calculation method or would you like to know which car best suits you? Contact us and we'll be happy to help!
A hassle-free incorporation via Bizantium
An new company in 3 steps
Bizantium gathers all information in an intuitive flow, generates the necessary documents, including the financial plan, and keeps all parties informed with real-time updates. Once the file is complete, the incorporation is completed at the notary with a digital power of attorney.
- Collecting data
- Generate financial plan
- Incorporation by notary
business days
companies established
digital
years of experience
Ready to get started?
Register your account today!
Ready to get started?
Register your account today!
Read this one yet? Relevant content for start-ups
Een bedrijfswagen als lichte vracht in je vennootschap: kan dat nog?
Als startende freelancer droom je misschien van een stoere pick-up of ruime SUV als ultieme fiscale optimalisatie voor je nieuwe vennootschap.
From employee to company manager: what changes on your payslip?
As an employee, it was simple: your net salary magically appeared in your bank account each month, while your employer handled the administration.
Why smart savings on your formation is the best first investment
You've made the decision: you're starting your own company. How do you ensure you maintain sufficient financial breathing room and working capital from day one?
EN 
NL 
FR