The ecological transition is no longer a remote vision, but an urgent challenge for businesses, including SMEs. To make the transition to sustainability achievable and affordable, the government offers – among other things – a wide range of tax incentives. Both the federal government and the three regions have developed a fiscal policy to support businesses with the greening process.
Tax measures to support sustainability
One of the most obvious ways to increase sustainability is an effective mobility policy in which cycling plays a key role. The allocation of company bicycles encourages employees to commute to work sustainably. Starting this tax year, the benefit of such a bicycle has to be calculated and shown on the pay slip, meaning that it will be declared on employees’ personal income tax return as taxable remuneration. However, this benefit is exempt from tax if they use the bicycle wholly or partly for commuting and claim the statutory flat rate rather than providing proof of their actual professional expenses for income tax purposes.
Mobility policy: company bicycles and bicycle allowances
Employees can also receive a bicycle allowance for commuting. This allowance is exempt from tax for the recipient if it is less than 36 euro cents per kilometre in 2025 and does not exceed 3,610 euros per year (an amount slightly more than this may still be exempt for employees).
Until 2026, employers who grant a bicycle allowance are entitled to a deductible and refundable tax credit for both voluntary increases in the allowance and its mandatory introduction (or increase) as a result of CLO 164 (see our article on the mandatory allowance (Dutch/French only)). Both tax credits can be applied, but the voluntary allowance increase only qualifies for the tax credit to the extent that it exceeds the mandatory allowance (up to a maximum of 5 euro cents per kilometre). In addition, the kilometre allowances for which a tax credit is used are no longer deductible as professional expenses and require extensive calculations and administrative procedures.
Deductibility of fossil-fuel and zero-emission company cars
The government is also taking a strong stance on cars. Since the reform of car taxation in 2021, the tax-deductibility of company cars that run on petrol or diesel has been gradually phased out and scrapped for cars purchased from 2025 onwards (including plug-in hybrids). Costs relating to zero-emission cars, on the other hand, remain fully deductible for cars purchased up to and including 2026 (after which the deductible element gradually drops to 67.5% for cars purchased after 2030). Investments in charging stations are also being encouraged and supported by keeping such expenses 100% deductible until 2030.
However, the tax treatment of reimbursements for battery charging at home is less clear. The current position is that if the employee or company manager in question has a charging station at home with a smart charging system, reimbursements for electricity (based on the CREG tariffs) for the company car are deemed to be included in the taxable benefit relating to the car. For more details, see our earlier article on the tax deductibility of car expenses.
Investments in charging stations: tax benefits
A draft programme law has now also been drawn up in which the first measures in the coalition agreement are turned into legislation. Subjects covered include the postponed phase-out of the expense deduction for plug-in hybrids, the adjustment of the gram formula used to determine the deductibility of car expenses and the scrapping of the term ‘fake hybrids’. The final text has yet to be agreed, but car taxation will certainly not get any simpler.
The mobility budget: a flexible solution for employees
The benefits outlined above can also be combined in a tax-friendly way in an employee’s remuneration package by means of the ‘mobility budget’. This measure has existed for several years and allows a company car (or the right to one) to be exchanged for other mobility options. The budget, which includes the estimated cost to the employer of the surrendered company car (or entitlement), can be spent in three separate categories, the first of which is a more environmentally friendly car (which must be emission-free from 2026).
The second budget category includes alternative mobility solutions such as a lease bike, tickets for public transport in the EEA, reimbursement of capital repayments (and interest) or the rent for a property within 10 km of the permanent place of employment. The third category consists of the remaining balance of the budget and is paid out in the first month of the year following the employment year in question. A special social security contribution of 38.07% is withheld from this payment.
Investment deduction for green projects and technology
The ecological transition goes beyond the greening of mobility, of course. The investment deduction has already been the subject of fundamental reforms (which take effect this year). For investments made from 1 January 2025, there are three possible deduction categories.
First, there is the basic deduction (of 10%) that is only available for sole proprietorships or small companies and excludes environmentally harmful investments (unless there is no economically comparable carbon-free alternative). This basic deduction can be increased to 20% if it relates to digital investments. Unused investment deductions from corporate tax can only be carried forward to the next tax period.
Thematic deduction: sustainable investments
Secondly, there is the thematic deduction (40% for sole proprietorships and small companies, 30% for other companies) for sustainable investments. Among other things, this applies to means of transport in the logistics process, as well as to other ecological expenses such as energy efficiency and infrastructure. It is important to check which investments are eligible (based on the published lists) and whether or not a regional or federal certificate must be requested for them.
Finally, there is the technology deduction of 13.5% for environmentally friendly investments in research and development as well as patents. A certificate is also required for this.
Again, the coalition agreement has announced a number of changes, including the right to carry forward the basic deduction in corporate tax indefinitely, the equalisation of the percentage of the thematic investment deduction to 40% and the dropping of the certificate requirement for investments in research and development. However, these measures have not yet been put into a bill, so it remains to be seen to what extent they will be taken up.
Guidance from Grant Thornton on tax incentives
At Grant Thornton, we’ll be happy to help you find your way through this tax incentive jungle. Our team consists of specialists who keep track of the latest developments and can give you proactive and flexible assistance with finding sustainable solutions in tax and other areas for your company.
