As company cars are really popular in Belgium, more and more companies propose this type of compensation to recruit and retain their employees. From a tax point of view, private use of the car by the employee is taxed as a benefit in kind in the employee’s name.

At the end of the leasing contract, the company (lessee) may often opt to buy the car with advantageous conditions. The company frequently transfers this right to persons with whom it has or has had professional relations. The question in this case is whether the difference between the advantageous price and the market value of the car constitutes a taxable benefit in kind for the individual or not.

The tax authorities, followed by two recent Court decisions, consider that if the buy option is exercised by somebody other than the lessee, the difference between the reduced buy option price (settled in the contract between lessor and lessee) and the market value of the car should indeed be taxed as a benefit in kind in the name of the final buyer. According to the tax authorities, the leasing company would always sell the car at market value if to any other third party. The reduced value would never be used.

Nevertheless, the evaluation of the market value of the car may be disputed, as the tax authorities only rely on specialised press valuation and tend to overestimate the value, without taking into account actual facts such as the mileage, the wear and tear, the general state of the car, etc.