Tax deductibility of company cars: what’s changing in 2026 and beyond

Key takeaways:

• Company cars with combustion engines purchased or leased in 2026 will no longer be tax-deductible. Commercial vehicles with combustion engines are not affected by this change and will continue to be subject to the current tax regime.
• Electric vehicles purchased or leased in 2026 remain 100% tax-deductible. This rate will gradually decrease until 2031.
• Self-employed individuals will, in principle, still be able to claim tax relief on a hybrid vehicle purchased or leased in 2026, but legal entities will not.
• Vehicle expenses for non-profit associations will be subject to corporate tax from 2026.

End of tax deductibility for combustion engine vehicles for companies and self-employed individuals

Combustion engine vehicles emitting CO₂, ordered from 1 January 2026, will no longer be tax- deductible. This applies to:

• Petrol and diesel vehicles
• Self-employed individuals and companies
• Purchases and leasing
• All purchase or leasing costs and related expenses: insurance, fuel, maintenance, etc.

Light commercial vehicles with combustion engines (up to 3.5 tonnes), such as vans or pick-ups, are not affected and therefore remain deductible in 2026 under their specific tax regime.

Does this apply to plug-in hybrid vehicles (PHEV)?

The 2026 tax deductibility phase-out was initially planned to include  plug-in hybrid vehicles, also known as PHEVs. But since then, the Arizona government has proposed an exception (subject to a vote in the State Legislature).

The deductibility of plug-in hybrid vehicles should be extended:

• Only for self-employed individuals, and therefore not for companies
• With a maximum deduction rate in 2026 ranging from 75% to 100% depending on vehicle's emissions

The final details of this extension will be confirmed as soon as the law is passed.

Electric company cars: 100% deductible in 2026

Electric company cars purchased or leased in 2026 remain 100% tax-deductible. This applies to:

• Self-employed individuals and companies
• Purchased or leased vehicles
• The vehicle’s purchase or leasing cost, and related expenses, including electricity

This rate of 100% is fixed for the entire life cycle of the vehicle while owned by the same taxpayer.

Gradual reduction in tax deductibility from 2027 to 2031

The advantageous deductibility rate set at 100% for purchases and leasing in 2026 will gradually decrease over the coming years:

• 95% for vehicles purchased or leased in 2027
• 90% in 2028
• 82.5% in 2029
• 75% in 2030
• And finally, 67.5% in 2031

Considering switching to electric for your company car? Act in 2026, to benefit from the maximum tax advantage.

Combustion engine car ordered in 2025 but delivered in 2026: deductible?

The end of tax deductibility for company cars with combustion engines applies to purchases and leases from 1 January 2026. For a vehicle purchase, the purchase order date is taken into account. For a lease, the relevant date is when the contract for the leased vehicle is signed.

Did you order a combustion engine vehicle in 2025, but will only receive it in 2026? You will still benefit from the scheme in force in 2025. In this case, the maximum deduction rate will be:

• 50% in 2026
• 25% in 2027
• 0% in 2028

These rates apply to the amount of your annual depreciation for a purchase, the leasing cost and related expenses (including fuel).

Vehicle registration tax in Flanders

Another change, but only in Flanders: from 1 January 2026, electric vehicles, including company vehicles, will also be subject to vehicle registration tax and annual road tax. Zero-emission vehicles were previously exempt.

• However, the amount of these taxes is low: €61.50 for the vehicle registration tax while the road tax  should, in most cases, be less than €100.
• Was your vehicle registered before 2026? If so, you will not be affected by this change and will not have to pay annual road tax.

Increase in CO₂ solidarity contribution for combustion-engine vehicles

What is the CO₂ solidarity contribution?

The CO₂ solidarity employer contribution is paid to the National Social Security Office (NSSO) by an employer when a vehicle is made available to an employee, including for private use.

Significant increase for combustion-engine vehicles

The calculation of this employer contribution depends on the vehicle's powertrain. Since 2023, this calculation includes a multiplier factor that applies only to CO₂-emitting vehicles.

In 2026, this multiplier increases to 4 (from 2.75 in 2025).

In practice, the CO₂ contribution for a vehicle purchased or leased in 2026 will therefore be multiplied by 4 for a combustion-engine vehicle compared to an electric vehicle

Non-profit associations taxed as legal entities: vehicle expenses now subject to taxation

From 1 January 2026, vehicle expenses for non-profits and other organisations subject to corporate tax will be taxable. This was not the case before 2026.

A 25% tax rate applies to:

• The full cost of combustion-engine vehicles purchased or leased from 2026
• Zero-emission vehicles, phased in from 2027. For vehicles purchased or leased in 2027, the 25% tax rate will apply to only 5% of total expenses, rising to 10% in 2028, 17.5% in 2029, etc.

This new taxation applies to all vehicle-related expenses: depreciation, leasing or rental costs, insurance, taxes, maintenance, and repairs.

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