Is a hybrid company car still fiscally advantageous in 2025?

With the new coalition agreement, the federal government has tightened the tax regulations concerning hybrid company cars, while simultaneously announcing certain relaxations. This has significant implications for businesses and self-employed individuals considering the acquisition of a hybrid vehicle. What are the consequences for your company in the coming years? And is it still fiscally attractive to invest in a hybrid vehicle now?

Tax deductibility of hybrids: how does it work?

Hybrid vehicles are subject to tax deductibility of expenses based on the so-called gram formula. This formula is designed to account for the vehicle's CO₂ emissions and fuel type. The calculation determines how much you, as an entrepreneur, can deduct for the vehicle in your tax return.

The tax deductions are calculated as follows:
120% - (0.5 x fuel coefficient x CO₂/km)

The fuel coefficient depends on the type of vehicle:

• Diesel vehicles: 1

• Petrol vehicles: 0.95

• Natural gas vehicles: 0.90 (for vehicles with less than 12 fiscal horsepower)

Depending on the vehicle's CO₂ emissions, deductibility can vary between 50% and 100%. This applies to the costs of vehicles with an internal combustion engine, including hybrids. Fully electric vehicles enjoy 100% deductibility.

What changes from 2025?

From 1 January 2025, the tax rules for hybrid vehicles have changed. Tax deductions for vehicles with an internal combustion engine are now being gradually reduced. This applies to all hybrid vehicles acquired after 1 July 2023:

• 2025: Deductibility is a maximum of 75%

• 2026: Deductibility is a maximum of 50%

• 2027: Deductibility is a maximum of 25%

• 2028: Deductibility becomes 0%

For hybrid vehicles acquired from 2026 onwards, a complete deduction ban applies (general deduction ban for costs of vehicles with CO₂ emissions acquired in 2026). This means that from 2028, costs for most hybrid vehicles are no longer deductible.

Genuine vs. false hybrids: what's the difference?

A significant distinction is made between "genuine" and "false" hybrids. A 'genuine' hybrid meets strict requirements regarding CO₂ emissions and battery capacity. A 'false' hybrid does not meet these requirements and therefore receives lower deductibility, depending on CO₂ emissions and the corresponding tax treatment.

For example, a false hybrid may be deducted at a higher CO₂ emission rate, which is disadvantageous for tax benefits. The tax authorities have published a list of vehicles considered "false hybrids."

What does the new coalition agreement bring?

With the new coalition agreement for hybrid vehicles, the rules will be relaxed in the coming years. The tax deductibility of hybrid company car costs will no longer decrease in the coming years but will be fixed. The deduction percentage of 75% remains applicable for vehicles acquired until the end of 2027. For cars emitting less than 50 grams of CO₂ per kilometre, the deduction percentage is even maintained at 100% until the end of 2027. This can be an attractive option for companies still wishing to benefit from tax advantages.

After 2027, the deduction percentage will decrease to 65% in 2028 and to 57.5% in 2029. These deduction percentages will apply for the entire usage period of the vehicle with the same owner or lessee. This means that acquiring a hybrid vehicle now or in the coming years remains fiscally advantageous for several years.

Fuel costs and electricity consumption

In addition to tax deductions for vehicle costs, there are also rules for the deductibility of fuel costs. For hybrid vehicles acquired since 1 July 2023, fossil fuel costs remain 50% deductible until 2027, which is one year longer than previously anticipated. Electricity consumption costs for plug-in hybrids are treated as those for fully electric vehicles, meaning these costs are also 100% deductible.

What now?!

The new tax rules mean that hybrid vehicles will remain fiscally advantageous for businesses for the time being, but the benefits will gradually decrease in the coming years. Companies that purchase a hybrid vehicle now can benefit from tax deductions until 2027. If they opt for a plug-in hybrid, they can enjoy full deductibility of electricity consumption.

But a word of caution: bear in mind that the new coalition agreement has not yet been translated into formal legislation. As such, several practical questions remain unanswered. For example, which hybrid vehicles will still qualify under the favourable regime, especially given that a new CO₂ emissions testing method is due to be introduced next year? Our experts are monitoring this closely and will provide an update as soon as possible.

Do you have any questions or uncertainties? Don’t hesitate to contact our tax experts at PIA Advisory. They’ll be happy to assist you!