If you’re self-employed in Belgium and running a sole proprietorship, you’ve probably wondered how to handle car expenses for tax purposes, or whether it’s worth buying a company car.
Maybe you’re also asking yourself: is it better to lease or buy? And can you reclaim the VAT on a second-hand car?
This article will help you navigate all these questions and make the right choice for your business.
Summary:
From a tax perspective, buying a company car or claiming your personal car as a business expense is becoming less and less attractive.
A few years ago, the tax deduction for an electric car could be as high as 120%. Today, it stands at 100%, and this percentage will gradually decrease in the coming years, depending on the year of purchase or lease.
But how much tax relief does a car actually provide nowadays? The deductibility of a car is generally determined by its CO₂ emissions (see details below). This same percentage also determines how much of your other car-related costs can be deducted, such as:
Are you unsure about buying or leasing an electric car through your business in 2026? You can still benefit from a 100% tax deduction. From 2027 onwards, this advantage will gradually be reduced.
The percentage of car costs you can claim as business expenses depends on the type of vehicle and its CO₂ emissions. For cars purchased or leased in 2026, the following maximum deduction rates apply:
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Until 2023, the costs of an electric car could be fully deducted up to 120%, but since then the maximum deduction has been reduced to 100%.
It’s worth noting that 2026 is the last year you can benefit from a 100% deduction over the full depreciation period, as this percentage will gradually decrease from 2027 onwards:
This rule also applies to electric bikes used for business purposes.
In most cases, the purchase of a new electric car is depreciated over 5 years, at 20% per year.
Electric cars bought or ordered in 2026 remain fully tax-deductible at 100% for the entire depreciation period. This means that you can still claim a 100% tax deduction for an electric car until 2027, provided it’s used for business purposes. 😉
Unlike non-electric cars, the depreciation percentage does not decrease over time.
From 2026 onwards, the tax deductibility of hybrid cars will be significantly limited and depends on the type of car as well as the type of self-employed person (individual or company).
| CO₂ Emissions | Maximum deduction (2026) |
| ≤50 g/km | 100% |
| 50 g/km | 75% |
For cars purchased or leased in 2027, the maximum deduction will be 95% or 75% (again depending on emissions), and from 2028 onwards, the deduction will gradually decrease to 0% by 2030.
From 2026, companies can no longer deduct costs for plug-in or standard hybrid cars.
Imagine, as a self-employed individual, you purchase a plug-in hybrid car with 50 g/km CO₂ emissions in 2026, depreciated over 5 years (20% per year), then the tax deduction would look like this:
Classic cars with internal combustion engines will no longer be tax-deductible from 2026, making them less attractive from a tax perspective.
In other words, if you buy or start leasing a diesel or petrol car in 2026, it will no longer be tax-deductible.
For cars purchased or leased between 1 July 2023 and 31 December 2025, the tax deductibility was calculated using the gram formula:
120% - (0.5% x [coefficient] x CO2)
Where the coefficient is:
| Diesel | 1 |
| Petrol, LPG, biofuel, electric | 0.95 |
| Compressed natural gas | 0.90 |
The CO2 is the CO2 emission of your car, which can be consulted here.
The percentage calculated using the gram formula determines your car’s tax deductibility. Note: in addition to this percentage, you must also take into account the maximum deduction limits:
Even if you bought your car before 2025, the deductible percentage decreases significantly each year of depreciation.
For example, if you purchased a petrol car in 2024 with a tax deductibility of 70% and depreciate it over 5 years (20% per year), the tax deduction would be as follows:
The deductibility of a second-hand car (and all related costs) follows the same rules as described above. The same principles also apply to leasing and car sharing.
A light commercial vehicle is a van. If it is used entirely for business purposes, the costs of a light commercial vehicle are up to 100% tax- and VAT-deductible.
You don't need to apply the CO₂ formula for a light commercial vehicle.
💡Read more about the tax deductibility of light commercial vehicles
You cannot deduct the full purchase price of your new (or second-hand) car in one go.
Instead, you spread the purchase price over the number of years you expect to use the car. This value also includes any VAT you couldn’t deduct.
Company cars are usually depreciated over 5 years.
💡 Learn more about depreciating costs
The VAT you pay on the purchase of your company car and other car-related expenses is partially deductible, up to a maximum of 50%.
This also applies if you use your car exclusively for business. If you also use your car for private trips, that 50% is reduced proportionally to reflect the personal use.
If you are self-employed in a sole proprietorship, the car is your personal property. You can deduct the business use of the car for tax purposes, but if you also use it privately, it’s up to you to report this honestly.
Example:
You buy a car that is 50% tax-deductible. You use this car 60% of the time for business purposes and 40% for private use. This means that, if the car is deductible up to 50%, you can deduct 60% of that amount for business use.
0.60 (business use) × 0.50 (tax-deductible percentage) = 30%.
Do you use your company car to go to the gym, pick up your children from school, or visit a sick relative? If you have a company, this private use counts as a benefit in kind: a non-cash benefit that is taxed by the authorities.
This benefit in kind (VAA/ATN) does not apply if you run a sole proprietorship.
Consult an accountant for more information about car deductibility in your company.
If you definitely need a car for your business journeys, then a company car is a good idea for your sole proprietorship.
Are other transportation options also an option? Then definitely consider whether you can rely on those; some options are even more tax-advantageous.
Also interesting:
Is buying a (electric) company bike tax-advantageous for self-employed individuals?
Every self-employed individual, whether you have a sole proprietorship or are a company director, can in principle buy a car for their business. Whether this is tax-advantageous and to what extent the car is deductible depends heavily on the type of car (new, second-hand, hybrid, electric, diesel, etc.).
Electric cars and cars running on hydrogen are 100% deductible because they emit 0 grams of CO2. Hybrid cars also have a high deductibility, but the deductibility will decrease in the coming years. An electric car is therefore the most tax-advantageous choice at the moment.
You usually depreciate your car over 5 years, at 20% per year. The tax-deductible amount depends on the type of company car.
Author - Artyom Ghazaryan
Artyom is Head of Accounting at Accountable, and a chartered Accountant & Tax Specialist.
Who is Artyom ?Thank you for your feedback!
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