Will CD&V’s company-car red line survive Belgium’s budget negotiations?

CD&V president Sammy Mahdi on Monday, 7 September, rejected any move by Belgium’s federal government to dismantle the favourable tax treatment of company cars, telling Het Nieuwsblad that he would “rather swallow a light bulb”. His intervention does not settle the matter: it establishes CD&V’s position before Prime Minister Bart De Wever’s five-party coalition chooses measures for the 2027 budget.

The dispute matters immediately to Belgian employees whose car forms part of their remuneration, to employers designing salary packages and to the leasing and automotive industries. It also reaches Brussels residents who combine a company car with SNCB, STIB or De Lijn services through the federal mobility budget. No employee has lost a car or acquired a new tax bill as a result of Monday’s statement; the government has not yet adopted the officials’ proposal.

The argument began with a federal spending review reported by De Standaard and Het Nieuwsblad. Prepared with input from several administrations, the Federal Planning Bureau and the Finance Inspectorate, it describes the present system as an inefficient use of public resources that chiefly benefits middle- and higher-income groups. Rather than proposing an overnight ban, the review recommends gradually narrowing the tax difference between remuneration paid as a car and remuneration paid as salary.

That distinction is important. A company car available for private use is taxed as a benefit in kind, while its social-security treatment differs from cash pay. Belgium’s Federal Planning Bureau estimated in a June 2025 study that applying a benchmark closer to cash remuneration could produce about €5.2 billion in additional public revenue. The bureau also stressed that this is a modelled comparison, not a forecast of money that the treasury could collect without behavioural changes, compensation or effects on employers and workers.

Mahdi’s framing is therefore political as much as technical. CD&V presents the car as part of an agreed wage package for working households and says abruptly changing that package would cut purchasing power. The officials’ framing is different: they see unequal taxation of comparable forms of remuneration and recommend a gradual correction. These are not competing accounts of whether the tax advantage exists; they are competing judgements about fairness, transition costs and who should carry Belgium’s budget adjustment.

The system has already changed substantially. Under legislation adopted in 2021, cars with combustion engines acquired from 2026 no longer qualify for the established corporate-tax deduction, while deductions for zero-emission cars will also decline gradually. Belgium’s National Social Security Office says those incentives and rising CO2 solidarity contributions have made low-emission company cars more attractive. The reform helped turn corporate fleets into a major channel for electrification, although it left the favourable treatment of cars relative to salary largely intact.

The European connection comes through Belgium’s public finances rather than an EU instruction to abolish company cars. The European Commission reported in June that Belgium’s deficit reached 5.2% of GDP in 2025 and projected the same level for 2026, with debt expected to keep rising. Belgium remains under the EU excessive-deficit procedure and has undertaken to bring the deficit below 3% by 2029. The Council of the EU has set annual limits on Belgian net-expenditure growth, leaving the federal coalition to decide which taxes or spending cuts deliver the adjustment.

For that reason, the company-car row is a revealing test of the De Wever government. Each coalition party can support fiscal repair in principle while protecting constituencies from particular measures. Company cars sit at the intersection of Belgium’s unusually heavy taxation of labour, its fragmented mobility system and its climate strategy: removing the advantage without wider tax reform could reduce take-home value, while preserving it shifts the burden elsewhere.

Negotiators must now decide whether to discard the spending-review option, dilute it or connect it to a broader reform of labour taxes and the mobility budget. The practical questions remain unanswered: which contracts would be protected, how gradually treatment might change, whether employers would compensate workers and how much revenue would remain after those adjustments. Until a coalition agreement and draft legislation appear, Mahdi’s red line is a negotiating position, not government policy.