Corrective actions guidance relating to CO2 emissions

prepared in consultation with the law firm Tiberghien

 

This note summarizes the recommended steps to be taken by a company and/or drivers of a company vehicle, in order to adjust the (para-)fiscal situation to the correct CO2 emissions of such company vehicle.

The note distinguishes between:

  1. the correction of individual salary sheets 281.10 (employees) and 281.20 (company managers) in the name of the driver of the vehicle;
  2. the correction of the solidarity contribution for the private use of a company vehicle on behalf of the company;
  3. the correction of corporate income tax returns on behalf of the company;
  4. the correction of personal income tax returns on behalf of the drivers of the vehicles in question.

This document provides a general overview of the corrections that may be relevant in the majority of cases. It cannot be excluded that other corrections may be necessary in specific cases, depending on the capacity/tax regime of the company and/or of the drivers of the vehicles involved. There is also the possibility that during any discussions with the tax authorities and/or the social security authorities, other corrections may be suggested/discussed in order to correct the (para-)fiscal situation, as a result of which, e.g., not every step in the overview below has to be gone through. The latter may in particular be the case with regard to wage withholding taxes. Such discussions may also be appropriate to avoid or limit possible sanctions (tax increases, flat rate penalties, administrative fines, negligence interest,...).

Note that a correction is only necessary if the correct CO2 emissions also effectively give rise to a different (taxable) amount. Indeed, the latter is not always the case, e.g. regarding the deductibility of car expenses in corporate income tax (the deduction percentage can remain identical), or regarding the minimum benefit in kind in personal income tax (e.g. the minimum benefit in kind for assessment year 2025, income 2024: EUR 1,600).

 

Step 1 – correction individual salary sheets 281.10 and 281.20

The amount of the benefit in kind for the personal use of a vehicle free of charge is calculated by taking into account, inter alia, the CO2 emissions of the car. Consequently, an adjustment in CO2 emissions may result in a different amount of the benefit in kind in the calculation (more or less than the amount initially shown on the individual salary sheet 281.10 or 281.20).

The company should contact their payroll service provider for this purpose. In principle, the following steps should be taken:

  • The communication of the correct CO2 emissions to the payroll service provider so that the correct benefit in kind is included in the salary sheet in the future and subject to the wage withholding tax and solidarity contribution;
  • Correction of the amount of the benefit in kind for the months of the (current) calendar year 2024 still to be corrected via the salary sheet of the next few months, accompanied by an adjustment of the wage withholding tax withheld for the current calendar year 2024. The wage withholding tax returns for calendar year 2024 will also be adjusted if necessary (in principle by/with the cooperation of the payroll service provider);
  • Correction of already submitted individual salary sheets 281.10 and 281.20 for previous calendar years by the company via Belcotax On Web (if applicable). Note that such a correction is still possible for salary sheets as of calendar year 2021. For the latter calendar year, the possibility is only open until September 30, 2024.

    - If the amount of the benefit in kind is higher, a correction of the individual salary sheets may also potentially trigger an additional declaration and payment in withholding tax.1
     

    Example

    The benefit in kind for an employee's company car was included for the calendar year 2023 in the amount of 2,300 EUR on an annual basis. Due to an increase in CO2 emissions, the recalculation of the benefit in kind results in an amount of 2,500 EUR on an annual basis. The company will submit a corrective salary sheet 281.10 via Belcotax On Web which will include the amount of 2,500 EUR on an annual basis. This will possibly also give rise to an additional declaration and payment of wage withholding tax due on the difference (additional benefit in kind) of 200 EUR.

    - With a lower amount of benefit in kind, it may no longer be possible to request a refund of wage withholding tax. The driver will offset this (higher) wage withholding tax against the personal income tax due (in the personal income tax return or via an objection/request for ex officio exemption - see step 2, d).

    Example

    The benefit in kind for an employee's company car was included for the calendar year 2023 in the amount of 2,800 EUR on an annual basis. Due to a reduction in CO2 emissions, the recalculation of the benefit in kind results in an amount of only 2,500 EUR on an annual basis. The company will submit a corrective salary sheet 281.10 via Belcotax On Web which will include the amount of 2,500 EUR on an annual basis. In principle, the wage withholding tax on the over-declared benefit in kind (300 EUR) is no longer recoverable (or compensable through wage withholding tax returns) so that a recovery must be made through the driver's personal income tax (see step 2, d).

As far as wage withholding taxes are concerned, there is a special tax assessment period of five years (art. 358 ITC 1992) which states that, if an audit or an investigation in connection with the application of income taxes in the name of a specific taxpayer reveals that the tax provisions on wage withholding tax were violated in one of the five years prior to the year of the determination of the violation, the tax authorities may establish the wage withholding tax due within 12 months from the determination.2 Consequently, a correction of wage withholding tax may (have to) go back up to 5 years (prior to the year of the determination).

 

Step 2 – correction tax and social security returns (excluding wage withholding taxes)

a. Solidarity contribution for private use of a company vehicle

Again, the company can contact its payroll service provider. “DmfA” declarations can be amended for the quarters to which the adjusted solidarity contribution relates. A limitation period of 3 years applies.3

Here the (new) total contribution for the entire company should be listed ("change contributions for the entire company") and the "benefits" should be listed per employee under DmfA pay code 10.4

  • Correction for an ongoing quarter: at the latest on the last day of the month following the quarter, the DmfA declaration must be filed and the solidarity contribution due for that quarter must arrive at the NSSO.
  • Correction for quarters already expired: the payroll service provider can still modify DmfA returns already filed for quarters not expired.

    Note that, as a rule, a flat penalty will be applied for these quarters. This flat-rate penalty is equal to double the solidarity contribution due. A reduction of this penalty can be requested if one demonstrates exceptional circumstances that justify the filing of an erroneous DmfA declaration. It is appropriate to proceed spontaneously to amend the DmfA declarations. If this is not done and an ex officio correction is made, contribution surcharges (10%) and interest (7%) are due in addition to the fixed penalty.

 

Note that if you change your DmfA return more than six months after the end of the quarter, you must explain in the application why you are making this change. In this context, the employer can refer to the fact that for the purpose of determining the solidarity contribution, an incorrect CO2 emission was taken into account.

When the amendment is drawn up, one already gets an indication of the amount to be paid (or recovered). However, this only becomes final when you receive the notice of amendment of the contributions. From then on, a payment period of thirty days applies. Such a notice will only be issued if the total amount of contributions or recoveries is at least EUR 5.

If it turns out that too many solidarity contributions have been paid, a recovery may be requested. In this case, too, a limitation period of 3 years applies.

 

b. Corporate income tax

Regarding corporate income tax, the application of an incorrect CO2 emission may have given rise to an incorrect amount in the corporate income tax return in subsequent codes (box "disallowed expenses and other items of income"):

  • Code 1205: non-deductible automobile expenses and capital losses on automobile vehicles;
  • Code 1206: car expenses to the extent of a portion of the benefit in kind.

 

As for corporate income tax returns, a distinction must be made depending on the stage of the tax assessment procedure one is at:

  1. The tax return has not yet been filed: correct CO2 emissions must be taken into account when determining the amount of disallowed expenses in codes 1205 and 1206;
  2. The tax return was filed, but the tax return deadline has not yet expired and no assessment has yet been established: a one-time correction can be made in the tax return within the tax return deadline. Here, the correct CO2 emissions can be taken into account when determining the amount of disallowed expenses in codes 1205 and 1206;
  3. The tax return was filed, the tax return deadline has expired but no assessment has yet been issued: it is advisable to contact the tax inspection department in order to correct, by mutual agreement, the tax return already filed5. The correct CO2 emissions can be taken into account when determining the amount of disallowed expenses in codes 1205 and 1206;
  4. The assessment was established: an objection can be filed within the objection period of one year to declare the correct amounts.6 This possibility is open, in our opinion, both in the situation where an over-declaration was made (and the company wishes to obtain a reduction of the taxable base) and in the situation where an under-declaration was made (and the company may owe an additional amount of corporate tax)7;
  5. The assessment was established and the objection period has already expired: a request for ex officio exemption can be filed if an excessive amount was declared pursuant to Article 376 ITC 1992 within a period of five years from January 1 of the year in which the tax was established if an excessive amount was declared8. In our opinion, if an underdeclared amount has been declared, one can also spontaneously contact the tax inspection department in order to have the initially submitted tax return corrected within the extraordinary assessment period of three years (art. 354 ITC 1992).

 

c. Personal income tax

In a number of cases, the individual taxpayer will also have to individually correct his tax situation. Important here is that the driver takes into account the corrected individual sheet 281.10 or 281.20 (where possible) and any adjusted (higher) amount of wage withholding tax (see step 1). In principle, in terms of wage withholding tax (by the company), there will no longer be any recovery possible for earlier calendar years, since the wage withholding tax initially withheld has already been settled or will be settled in the short term with the personal income tax. Only for the calendar year 2024 a correction of the already submitted wage withholding tax returns will still be possible via Finprof - see step 1 - which means that the driver does not have to take any action for the time being. Consequently, a recovery of wage withholding tax will usually take place via a correction of the personal income tax, with which the wage withholding tax was/is credited.

Again, a distinction must be made depending on which stage of the tax assessment procedure one is at:

  1. The tax return has not yet been filed: the correct CO2 emissions must be taken into account when determining the amount of the benefit in kind to be declared;
  2. The tax return was filed, but the tax return period has not yet expired: within the tax return period and if an assessment has not yet been established, a one-time correction can be made in the tax return;
  3. The tax return has been filed, the tax return period has expired but no assessment has yet been issued: it is advisable to contact the tax inspection department in order to correct the return in consultation9;
  4. The assessment was established: an objection can be filed within the one-year objection period to declare the correct amounts10. This possibility is open, in our opinion, both in the situation where an over-declaration was made (and the driver wishes to obtain a refund) and in the situation where an under-declaration was made (and the driver may owe an additional amount of personal income tax);
  5. The assessment was established and the objection period has already expired: a request for ex officio exemption can be filed if an excessive amount was declared pursuant to article 376 ITC 1992 within a period of five years from January 1 of the year in which the tax was established11. If an underdeclared amount has been declared, one can o.i. spontaneously contact the tax inspection department in order to have the initially submitted declaration corrected within the extraordinary assessment period of three years (art. 354 ITC 1992).

 

1. Note that this (additional) wage withholding tax should in principle be borne by the employee/company manager, in order to avoid any additional (taxable) remuneration.
2. This provision was also slightly modified starting as from assessment year 2023.
3. The statute of limitations is 10 years in the case of fraud. In principle, this statute of limitations will not apply.
4. NSSO Instructions 2024/2.
5. The tax audit service can be found on the back (page 2) of the most recent assessment notice.
6. Under Article 366 of the Income Tax Code 1992. For example, suppose a company whose fiscal year expired on December 31, 2022, filed the corporate income tax return before the deadline of October 10, 2023. The corporate income tax assessment (as per the return) can be established until June 30, 2024 (under Article 359 ITC 1992). Assuming, for example, that the assessment notice was sent on April 4, 2024, the company can still file an objection today because the one-year objection period has not yet expired.
7. Pursuant to Article 371 of the Income Tax Code 1992, notices of objection must be filed within a period of one year from the third working day following the date of mailing of the assessment notice on which the period for objection is mentioned, and which appears on the aforementioned assessment notice, or the date of notification of the assessment or of collection of taxes by a means other than by assessment. Prior to January 1, 2023, an objection period of six months applied. The one-year objection period also applies if the previous six-month objection period had not yet expired on January 1, 2023 (Circular No. 2023/C/23 of March 2, 2023).
8. The company will have to be able to prove that the conditions of Article 376 of the ITC 1992 are met, in particular that there is a material mistake.
9. The tax audit service can be found on the back (page 2) of the most recent assessment notice.
10. Pursuant to Article 371 of the Income Tax Code 1992, notices of objection must be filed, on pain of forfeiture, within a period of one year from the third working day following the date of mailing of the assessment notice on which the period for objection is mentioned, and which appears on the aforementioned assessment notice, or the date of notification of the assessment or of collection of taxes by a means other than by assessment. Prior to January 1, 2023, an objection period of six months applied. The one-year objection period also applies if the previous six-month objection period had not yet expired on January 1, 2023 (Circular No. 2023/C/23 of March 2, 2023).
11. The driver will have to be able to prove that the conditions of Article 376 of the ITC 1992 are met, in particular that there was a material mistake.