Demystifying a Taxing Problem

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.

BIO

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.

bvanham@tcoplus.com

 

 

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