Belgium Car Leasing Tax: Why Wallonia Is Losing Millions
Wallonia is losing an estimated 47 million to 60 million euros in vehicle taxes because the vast majority of leasing companies are based in Flanders and Brussels. Minister François Desquesnes states a 2001 modification to the Special Financing Law prevents Wallonia from recovering these funds without a voluntary agreement from the other regions.
Why is Wallonia losing leasing tax revenue?
The current tax imbalance stems from a 2001 decision by the Verhofstadt government to modify the Special Financing Law (LSF) of January 16, 1989. This change mandated that any modification to the legal regime of leasing companies requires an inter-regional agreement.
Because taxes depend on where a vehicle is registered, the location of the leasing company determines who collects the revenue. According to Minister Desquesnes, 99% of leasing companies are historically located in Flanders and Brussels, largely due to more favorable tax regimes for automobile fleets.
While many drivers live in Wallonia, 90% of these vehicles are registered in the name of the leasing company rather than the primary driver.
How much revenue is being diverted?
A study by the Walloon Government’s fiscal cell found that 92,889 leasing cars had primary drivers residing in Wallonia. At the time of the study, this represented 47 million euros in revenue.
Although the study has not been updated, the rise of electric vehicles and inflation between 2022 and 2025 could have increased these figures. It is possible that the number of Walloon leasing drivers has exceeded 100,000, with lost revenues potentially reaching 50 to 60 million euros.
Deputy Bruno Lefebvre stated that a fairer distribution of these automobile tax receipts would be beneficial for a Wallonia that is “financially exhausted.”
What prevents Wallonia from recovering the funds?
The Walloon government is restricted by Article 4, paragraph 3 of the LSF. While this paragraph confirms that regions can set tax bases and rates for circulation taxes, it creates a specific exception for leasing companies.
Minister Desquesnes explains that leasing vehicle taxation cannot be altered without a cooperation agreement, which requires the voluntary consent of all three regions. Wallonia cannot act independently to reclaim the 47 million euros.
Desquesnes describes Wallonia’s current negotiating position as “very unfavorable.” He suggests that any progress may require integrating this issue into a broader federal discussion regarding the Special Financing Law.
What could happen next?
Wallonia may attempt to link the leasing tax issue to wider federal negotiations to move the needle. A possible next step would involve seeking a cooperation agreement, though this would depend on whether Flanders and Brussels agree to lose revenue.
Why are most leasing companies in Flanders and Brussels?
According to Minister Desquesnes, these regions have historically offered a more favorable tax regime for automobile fleets.
What is the LSF?
The LSF is the Special Financing Law of January 16, 1989, which was modified in 2001 to require inter-regional agreements for changes to leasing company legal regimes.
How many Walloon residents are affected by this?
A Walloon Government fiscal cell study identified 92,889 leasing cars with primary drivers in Wallonia, though current estimates suggest this number may have passed 100,000.
Should tax revenue follow the location of the company or the location of the driver?