Company cars get driven more than two times further than privately-owned cars, disproportionately contributing to road transport pollution and traffic congestion. Yet European governments subsidize these corporate-owned fleets to the tune of $31 billion per year, says the Brussels-based Transport & Environment think tank.
“The money that helps companies buy cars applying VAT returns and write-offs comes from your pocket,” states a report from the green NGO, adding that “EU27 and U.K. governments are pouring over $31 billion of public money every year to help companies buy polluting cars.”
And nowhere is the company car more cosseted than in Belgium, where each vehicle is subsidized by $6,476. Every Belgian taxpayer pays $194 annually to finance the nation’s company cars, which top earners usually drive.
Belgium’s high tax rates make it more financially attractive for employers to reward workers with cars rather than with better wages. Fuel is also often provided for free, disincentivizing cleaner, greener transport modes.
“How can you convince somebody who gets a free car with their job, plus free petrol and free parking spots in front of their house and at their office, to take the train instead?” asked Elke Van den Brandt, the Minister of Mobility for Brussels.
“Giving a car is cheaper than paying people in Euros,” she added, but this means that “a lot of money from the federal government is encouraging traffic jams.”
Subsidized car ownership leads to additional car usage, increasing congestion and pollution, and contributing to road danger. Company car schemes are also socially detrimental in other ways because the people most likely to benefit from them are from higher income groups.
“Company car schemes should be phased out,” states the Transport & Environment think tank, but this is politically fraught, with many employees wedded to their free car use, an extremely popular perk.
“People who have free car use like it,” agreed Van den Brandt, a Green politician.
But, she added, “we need to change the system. People should be paid in Euros, not with free car use.”
Green parties across Europe tend to favor such a switch, preferring that any transport benefits provided to employees should be in the form of mobility budgets. These can be spent on more environmentally friendly modes rather than always for car use alone.
“Give people money in mobility budgets, so they can choose how to use it,” said Van den Brandt, who complained that political opponents often accuse Greens of “wanting to take your car away.”
Instead, Greens want the subsidy, if it’s to be offered at all, to be more socially progressive.
“The healthy ecological choice” should be on offer, too, she said.
Instead, a recent fudge in famously fractious Belgium has kept the company car subsidy in place, but from 2026 the tax break will only apply to zero-emission cars. Good for reducing emissions but of no use in reducing congestion, removing road danger, or increasing all-population health.
The Belgian Greens were electorally punished three years ago when the party pledged to remove the company car perk. Opinion polls suggested the party should have had a predicted 16% share of the vote, but this fell to 10% during the election itself, with many pundits blaming the party’s company car policy for the lackluster result.
The people who most benefit from company car subsidies are politically powerful but even if they weren’t it has proven hard to get people out of cars.
A scheme in place since 2019 which allows employees with company cars to trade them in for public transport benefits like reduced taxi costs, free bicycles, or shared car services has had low take-up. Lots of carrots, but no sticks, then.
“There’s better infrastructure for cyclists and pedestrians [in Brussels] now,” stated Philipp Cerny, the Berlin-based creator of the EU Mobility Atlas.
“But the car traffic is still the same partly because of the incredibly stupid business car scheme where you get part of your salary as a car; that promotes more and more car use.”
Philip Amaral, policy director of the Brussels-based European Cyclists’ Federation, agreed that the city has benefitted from the addition of more cycling infrastructure in recent years. Still, it’s probably not used as much as it could be because, he said, “when somebody can get a car for free, they will use it instead of other modes.”
“When I moved to Belgium,” Amaral remembered, “a friend of mine, an average employee at an IT company, not a big boss or anything, got a company car, and his mobility habits changed. He started by saying the car would only be used for trips to the countryside, but then he started using it to go to the [nearby] grocery store.”
Clearly, on several levels, this is unsustainable.