Driving a sustainable future

What next for company cars in Belgium?

Company cars have long been a central part of the certain jobs in Belgium. An anticipated perk which specific roles attract either through necessity or as a product of status. In fact, of the over 6 million cars in Belgium, over 10% are company cars.

Whilst this is a necessary cost to acquire the best talent, it does have an impact beyond the accounts. As businesses move towards net zero, the impact of these fleets is felt in sustainability planning. There’s a balance to be struck where both the expectations of employees are met, without the company missing environmental goals. One which is only sharpened by increasing Government pressure to transition vehicle fleets away from burning fossil fuels.

sustainable mobility, shift to electric vehicles and multimodal transport in belgium, company car

'60% of Belgian companies have already adopted an electric vehicle only policy, with 83% of the remaining companies planning to make the change to electric in the near future.'

Earlier this year, PricewaterhouseCoopers (PwC) released the results of a survey looking at just this subject. Their survey looked at the status of employer’s mobility policy, with a focus on sustainability and the need to move to transport methods beyond the car.

Based on detailed interviews with over 30 companies of various sizes in different sectors, the results give a sober, clear-eyed perspective on where we are. They also highlight the two distinct approaches being taken by companies in Belgium.

Supercharging the move to electric

Of the companies interviewed, 60% had already adopted an electric vehicle (EV) only mobility policy. By moving to a zero emissions fleet, these companies are benefiting from the 100% tax deductibility scheme of these vehicles from the Belgian government. By comparison, CO2 emitting vehicles will see their tax deductibility drop to 0% by the end of 2026.

This makes the move to EV not just a sustainable choice, but a business case. Such a strong tax benefit has a profound impact on the Total Cost of Ownership (TCO) of such vehicles.

It’s not a surprise then, that of the remaining companies, 83% plan to make the change to EV in the near future.

One country, two directions

However, it’s not all plain sailing. There are two distinct approaches to mobility policy in Belgium: early adopters and skeptics.

The skeptical businesses are taking the Total Cost of Ownership (TCO) approach with their decision making. This is hampering the adoption of EVs, with only 30% of a fleet being electric where TCO methodology is applied.

By comparison, the early adopters have an 80% fully electric fleet, with the remaindered including technology such as hybrid cars.

So, why the disparity? It comes down to how the change is being managed and implemented within the business. Early adopters are taking a proactive approach to transitioning their teams. Events and opportunities are made for employees to learn about EVs and their implication from the company. Skeptics rely on the interest and initiative of the employee to seek out information on changing to low-emission vehicles.

Charging up the team

Irrespective of the approach being used, 100% of companies provide charging infrastructure at home and the office for employees with EVs. They also cover the charging fees when needed off-site as well.

This includes the installation of charging stations at home by many employers. Though, interestingly, skeptical businesses are more likely to pay for the installation than early adopting businesses. The impact of this cost can be offset by the emergence of leased charging stations, which are an increasingly common option across Belgium.

On your bike…

The change in mobility policy extends beyond EVs, however. In 2018, the Belgian government introduced the Federal Mobility Budget, with the aim of moving people out of their cars and on to bikes or public transport.

This budget contributes towards the cost of bicycle leases, purchases, and public transport costs. It can also be used to give a tax-exempt reimbursement of mortgage or home rental costs. The latter is proving very popular and the easiest to administrate.

The use of the Federal Mobility Budget is higher amongst the early adopting businesses. They are embracing a policy which uses many different, financially supported transport methods to make their business more sustainable. Known as a multimodal mobility policy, this approach leads to more flexible options for employees which increase the effectiveness of the initiative.

Skeptical businesses, who are still in the process of justifying EVs, mostly miss the opportunities which the Federal Mobility Budget and multimodal policies present to their budget and employees.

Not all good news

Whilst the transition to more sustainable mobility is key, there are risks in doing so. Risks which many companies seem to have not yet considered.

PwC highlights, for example, that whilst the tax deductions for zero emissions are great now, there’s no guarantee of how long they will continue. If a company has a large fleet of EVs, then any shift in government policy away from the 100% tax deductible status for these vehicles could have a large impact on their bottom line.

Similarly, the complexity which the Belgian government is building into their policies can be painful for business operations. A current example is the reimbursement of charging fees for employees. Many companies are paying an average cost based on electricity prices published by the electricity market authority CREG. This makes these payments relatively simple to work out. Unfortunately, this is illegal. The Belgian government wants companies to pay back their employees exactly what they paid. This is a time and administration heavy exercise which is an additional cost the business will have to bear.

For companies large and small, it’s clear that the time to update your mobility policy is now. Not only to bring it in line with your sustainability goals, but, with the tax breaks available, to save both your business and your employees money. But be mindful that both the tax benefits and the Federal Mobility Budget are transitional benefits designed to cover the next few years only. It’s therefore prudent to build in regular reviews of your policy to ensure that it is the most effective solution for your business and employees going forward.

If you’d like to read more on the PwC survey, you can find it here.

 

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