Employers-levy for fossil fuel company cars from 2027
10/02/26
This article was last updated on 22 July 2026.
On 22 June 2026, the government published a letter to Parliament in which, following discussions with the sector, various adjustments and clarifications to the pseudo final levy (pseudo-eindheffing) are proposed.
From 2027, a new levy will apply to fossil fuel company cars that are also used for private purposes. As an employer, you pay this employers-levy as an additional taxation, while the existing taxation on company cars for employees remains in force. As part of the 2026 Tax Plan, this levy will be your responsibility as an employer, while the current taxable benefit for employees remains the same. This change is a move towards more sustainable business mobility. How will this affect your strategy?
What does this mean for your organisation?
The new employers-levy of 12 per cent of the value affects organisations with a fleet running on fossil fuels, where employees are also allowed to use the cars for private and/or commuting trips. You will be faced with:
Additional employer costs due to the employers-levy;
More complexity in payroll tax remittance (identifying which cars and which periods fall under the employers-levy).
It is advisable to review your company car policy now, so that you are prepared for the new legislation.
Employers-levy
From 2027, a new employers tax will come into effect if you offer employees a fossil-fuel company car for private use. This initiative is designed to discourage the provision of fossil-fuel lease cars for personal use, speeding up the shift towards a more sustainable vehicle fleet. The key elements are:
- The employers-levy is a final levy, payable by the employer;
- It applies if the car may also be used for private purposes, whereby commuting is also considered private use;
- The levy is in addition to the employee’s regular taxable benefit (“bijtelling”) for the company car;
- The measure targets cars with CO2 emissions; fully electric cars are excluded;
- The employers-levy per year amounts to:
- 12 per cent of the list price for cars up to and including 25 years old;
- 12 per cent of the market value for cars older than 25 years.
Proposed adjustments following consultation with the sector
On 22 June 2026, the government published a letter to Parliament regarding the practical implementation of the pseudo final levy. Based on discussions with the sector, the government proposes various adjustments and clarifications. The main points for employers are:
- A fossil-fuel replacement car is exempted from the pseudo final levy for a maximum of fourteen consecutive calendar days if the employee's regular car is temporarily unavailable due to damage, repair, maintenance, or a tire change.
- Until 1 January 2031, an exemption applies for one period of a maximum of seven consecutive days per calendar year, for example for the temporary provision of a fossil-fuel rental car.
- If the taxing right over the benefit of the car made available is partially allocated to another country under a tax treaty, this allocation of the taxing right may also be applied to the pseudo final levy.
- In the case of a merger or acquisition, the transitional arrangement is retained because the new employer takes the place of the former employer. When an employee switches employer (with a different payroll tax number), even if this occurs within the same corporate group, the transitional arrangement lapses. However, the employer retains the transitional arrangement if, during the transition period, they make a car to which the transitional arrangement applies available to a different employee (under the same payroll tax number).
Private use
Unlike the regular taxable benefit for company cars, the employee can’t avoid the employers-levy by limiting private use to a maximum of 500 kilometres per calendar year. For the employers-levy, commuting is also regarded as private use, whereas for the regular company-car benefit, commuting does not count as private use.
Payment of the employers-levy
The employers-levy for 2027 must be settled when filing the payroll tax return for the second period of 2028. Payment can be made throughout the year based on an estimate, with a final reconciliation later. If a fossil-fuel company car isn't available for the entire year, the levy only covers the months it is used. And if the car is available for private use during any part of a month, it's assumed to be available for the whole month for levy purposes.
Employers can't transfer the employers-levy to employees.
Transitional rules
For company cars with CO2 emissions that were already made available to employees before 1 January 2027, a transitional arrangement applies. The government proposes to extend this transitional arrangement, so that for these cars the pseudo final levy would only need to be paid starting from 1 January 2031.
Employee’s taxable benefit
The employers-levy does not stand alone; it is part of a package of measures to make vehicle fleets more sustainable. Whereas in previous years the use of zero-emission cars was encouraged through lower benefit-in-kind percentages for employees, from 2027 the use of fossil-fuel cars will instead be taxed more heavily. The reduced benefit-in-kind percentages for employees have already been phased out step by step in recent years. In 2026, a reduced rate of 18 per cent still applies on the first 30,000 euro of the list price, and in 2027 this percentage increases to 20 per cent. From 2028, the reduced rate will be abolished entirely.
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