Demystifying a Taxing Problem

Bart Vanham

Bart Vanham

Co-founder, TCOPlus

Bart, please give us an overview of your busi­ness.
TCOPlus offers three prod­ucts to the mar­ket. The first is Green­Cube, which is soft­ware we have built around all the dif­fer­ent tax­a­tion rules in Europe and in the rest of the world. Green­Cube visu­al­izes the tax­a­tion impact of improve­ment projects such as CO2 because Europe has about nine­teen coun­tries that have linked car tax­a­tion to CO2 emis­sions of the car. We have visu­al­ized this in soft­ware and we use the soft­ware to do an imme­di­ate “what if” analy­sis based on the actual data of our cus­tomers. We upload the data, we take a pic­ture of their cur­rent sit­u­a­tion, and once it is uploaded in the Green­Cube sys­tem, it is put online and our cus­tomers can imme­di­ately see the impact of sce­nar­ios they want to explore. The unique sell­ing propo­si­tion of the tool is that, of course, we take out all of the rel­e­vant tax­a­tion infor­ma­tion linked to the dif­fer­ent coun­tries and we even bring, at the visual point, the hid­den tax­a­tion effect.  If you look at gen­eral busi­ness cases for improve­ment projects, about 35 to 40 per­cent is rep­re­sented by taxes and that is usu­ally not cap­tured for these projects.

A sec­ond ser­vice we pro­vide to global and inter­na­tional fleets is what we called FleetCube.  FleetCube is a global report­ing tool where we upload the data from a client and its global sup­pli­ers. We assem­ble the data, check it, clean it, and upload it in a three dimen­sional data base. We pre­de­fine KPI’s and the client can slice and dice his infor­ma­tion and by a mouse click can see what his fleet is com­posed of:  the num­bers, the num­ber of cars by brand and model, by sup­pli­ers, by cor­po­rate entity or divi­sion,  the num­ber of leas­ing com­pa­nies, the spend, CO2 emis­sions, etc. All rep­re­sented and reported in fancy dashboards.

And the third ser­vice we offer to the inter­na­tional fleet man­agers is what we call cen­ter of excel­lence or Fleet­Cen­tral, mean­ing we assist inter­na­tional fleet man­agers with the cen­tral­iza­tion of fleet processes. It is actu­ally the con­cept of a shared ser­vice cen­ter trans­lated into fleet processes. We, for a num­ber of coun­tries in scope, will map the fleet processes in the coun­try and then assess what processes are in com­mon and if there is an oppor­tu­nity or fea­si­bil­ity to have them cen­tral­ized in one country.

Tell us about the Euro­pean fleet mar­ket. What are some of the unique char­ac­ter­is­tics that you see?
Europe is not a sin­gle mar­ket although they do pre­tend to be. Europe is the United States of Europe, mean­ing we have lots of dif­fer­ent coun­tries, lots of dif­fer­ent lan­guages and lots of dif­fer­ent cul­tures. That is what makes Europe a lit­tle bit unique and also very dif­fer­ent to under­stand when you are not from Europe.

Going back to my spe­cial­iza­tion, if you look at the tax­a­tion sys­tem in Europe, it is quite  dif­fer­ent in the var­i­ous coun­tries – you need a guide — so that is why we also pub­lish the Inter­na­tional Fleet Guide.  The lev­els of tax­a­tion dif­fer sub­stan­tially, going from 0 in Lux­em­bourg to almost 180 per­cent, for instance, in Den­mark. That is also some­thing that you need to take into account.

Cul­tural dif­fer­ences pre­dict that a one size fits all will never be pos­si­ble in Europe. For instance, if you are in Italy, dri­ving a Fiat is fine, but dri­ving a Fiat in Ger­many will not be fine. Those are things that you need to take into account and that makes it inter­est­ing and appeal­ing, and on the other hand very difficult.

What advice would you give to a North Amer­i­can fleet man­ager who just been handed a global fleet to man­age?

The first step is to mea­sure. Take a pic­ture of what your sit­u­a­tion is today and then look at that pic­ture and see what the ele­ments are that can be improved. My advice to man­agers or inter­na­tional fleet man­agers new in the busi­ness or who start a global pro­gram – mea­sure! Make sure you con­sol­i­date data, learn from what you see in this con­sol­i­dated data, and that already will be a big, big step in the right direction.You need a guide, a men­tor and you need also to com­mu­ni­cate with your peers, with your sup­pli­ers, with other peo­ple that have done this before you.

The biggest mis­take you can make is a copy/paste mis­take. If it works here and  you think it will work every­where and you copy and you try to paste, you will 100 per­cent for sure run into trouble.

What kinds of trends are you see­ing in the indus­try with respect to tax­a­tion?
Tax­a­tion is increas­ingly linked to C02-emissions.  In Europe it started in 2005 in the UK; the UK was the first coun­try to impose a ben­e­fit in kind tax­a­tion on CO2 emis­sions. And then grad­u­ally it was picked up by other coun­tries in Europe, so now we have about nine­teen coun­tries that have links to emis­sions to tax­a­tion or the other way around. What we see now is that the rest of the world is pick­ing up these ideas: we have Japan, South Africa,  and Canada using C02-emissions for taxes or duties. So, they are also pick­ing up on the idea, which is log­i­cal because the envi­ron­ment is a world issue. Sec­ondly, I think that politi­cians also under­stand that when you tax based on an envi­ron­men­tal objec­tive; peo­ple tend to swal­low this a lit­tle bit better.

What have you seen in terms of the cor­po­rate con­scious­ness being raised?
CO2 emis­sions and  envi­ron­ment fits under the umbrella of cor­po­rate social respon­si­bil­ity or CSR. So, CSR, CSR objec­tives and CSR strate­gies; every inter­na­tional and even national com­pany has a CSR objec­tive. It dri­ves projects like CO2 improve­ment projects, but it also dri­ves projects around safety. The good thing is that CEOs and CFOs and other peo­ple that are dri­ving the strat­egy have real­ized that if you have a good CSR strat­egy it will bring sav­ings, which is log­i­cal because CSR is also about build­ing in effi­cien­cies and effi­ciency means cost cutting.

In a recent pre­sen­ta­tion you gave some exam­ples of fleet vehi­cles that could be offered for some pretty dra­matic sav­ings. Can you talk about that a bit?
I showed you our Green­Cube and the unique sell­ing propo­si­tion of the tube is that it visu­al­izes the tax effect of CO2 improve­ments. To give you an exam­ple, in Bel­gium for instance, you can deduct your fleet cost from your tax­able income. But the per­cent­age you can deduct depends on the CO2 emis­sions of your com­pany cars. That varies between 50 per­cent and 120 per­cent. Usu­ally that is not visu­al­ized because that is only a cost which is vis­i­ble if you are a CFO or tax direc­tor fill­ing in the cor­po­rate tax return. Now, what we do is we take this hid­den tax cost and we bring it into the fleet equa­tion. Hence, we evolve from  a TCO to a TCO plus sit­u­a­tion, includ­ing all tax­a­tion effects. We make it vis­i­ble and this brings flesh to the bone when­ever you are build­ing a busi­ness case.

That is one exam­ple. The other exam­ple is if you take a car with new tech­nol­ogy like a Lexus CT 200h hybrid; that car tends to be a lit­tle bit more expen­sive in terms of lease price com­pared to the cars it is com­pet­ing against. But if you take into account the tax effect of the hybrid car and the tax incen­tives you have in some coun­tries for hybrid cars, then although at first sight the cars seems more expen­sive, the car becomes cheaper than most of its com­peti­tors. As a fleet man­ager you want to make sure that you put the cars at the right place in the car pol­icy so that it is not com­pet­ing against mod­els where no one will choose your hybrid car and you will not reach your envi­ron­men­tal objective.


Bart Van­ham estab­lished Fleet&DriverCare in Bel­gium, a com­pany focus­ing on mea­sur­ing and improv­ing dri­ving behav­ior, and is a co-founder of TCOPlus. Bart’s main activ­ity is con­sult­ing on indi­rect taxes, car tax­a­tion, and within the frame­work of TCOPlus, on dif­fer­ent fleet related top­ics. Bart is co-founder of the Inter­na­tional Fleet Man­agers Insti­tute (IFMI), a dis­cus­sion and train­ing forum for inter­na­tional fleet man­agers. He  is also a con­sul­tant for sev­eral car man­u­fac­tur­ers, dis­trib­u­tors and deal­ers, fleet man­age­ment com­pa­nies, and other com­pa­nies directly or indi­rectly involved in the auto­mo­tive sector.