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What advantages does a mobility budget offer?

Tuesday 22/09/2020
Welke troeven biedt een mobiliteitsbudet?

In recent years, a number of new regulations have been developed in the field of mobility with a view to improving sustainability.

First, the mobility allowance came along. But before it was properly established, it was annulled again, and, as of 2021, it will definitely be a thing of the past. The mobility budget was created one year after the allowance. This still exists, and does provide quite a few advantages.

What exactly is the mobility allowance?

Via the mobility allowance, an employee could exchange his/her company car for a cash allowance thatis not or is barely subject to social security contributions and taxes. This ‘salary’ is treated differently, however, compared to the salary of an employee who is not entitled to a company car. The Constitutional Court considered this a reason to annul it this year for reasons of discrimination.

In order to not overly disadvantage employees who are already receiving the mobility allowance, the Court decided that the system will only disappear as of 1 January 2021. The mobility allowance will therefore still be paid out via the payslip until the end of the year.

Up to today, nothing has been put forward to adapt the regulation of the mobility allowance. It is therefore best that you, as an employer, take action yourself if you have employees who currently receive this mobility allowance.

What are the available alternatives for the mobility allowance?

As an employer, you can offer three alternatives to employees who benefit from the mobility allowance.

  • You can re-assign a company car. The question here remains, of course, whether your employee, who chose to exchange his/her company car, will be keen to accept this option.
  • You continue to pay out the mobility allowance as an ordinary cash allowance. This is subject to social security contributions and taxes, however, just like an ordinary salary. This will leave your employee with a much lower net income than before.
  • You can convert the mobility allowance into a mobility budget. This scheme will remain in place in full, and seems to us to be the most interesting option. As an employer, you will be required to introduce the mobility budget into your organisation, and provide the necessary time and resources to organise its management.

What does the mobility budget involve?

With the mobility budget, an employee is able to exchange his company car for a specific budget. Employees who are eligible for a company car on the basis of their position within the company can also apply for a mobility budget.

How can you calculate the mobility budget?

The mobility budget is calculated on the basis of the total cost price of the company car, the so-called ‘total cost of ownership’. This includes, among other costs, the leasing costs, CO2 contribution, fuel costs, non-deductible VAT and other costs that are not included, such as winter tyres and insurances.

How can the mobility budget be spent?

An employee has three options, and these can all be combined within the boundaries of the budget.

1. A more environmentally-friendly company car

An employee can still opt for a company car, which could be a different and more environmentally-friendly model.

2. Sustainable means of transport

An employee can spend the available budget on sustainable means of transport. There are many options. Think of a public transport pass, for example, but also the purchase, maintenance and equipment of an (electric) bicycle, hoverboard or electric scooter.

The budget can also be used to buy individual tickets for public transport for someone other than the employee himself/herself. The company car can therefore be simply left at home for a family trip to the seaside.

The costs for a company bike and a bike allowance can also be financed with this budget. The same applies to housing costs (rental fees or mortgage interests) insofar as they relate to a place of residence within a radius of 5 kilometres of the normal place of employment. Living near your place of work is considered to be a mobility solution.

3. Any balance in cash

If some of the budget still remains at the end of the year, this will be paid to the employee after deduction of a one-off social security contribution of 38.07%.

Figures say more than words

We compare the tax processing of the company car benefit to a mobility budget below.The actual effect will always depend on the choices of the employee. In all cases, the cost price for the employer remains the same.

Assume an employee living in Antwerp, who has been offered an Audi A5 Coupé (diesel) as a company car, with a catalogue value of € 38,560. He also has a fuel card.

We compare the three possible situations:

  1. A more environmentally-friendly company car, supplemented with sustainable means of transport and payment of the balance in cash.
  2. No company car, but a combination of sustainable means of transport and payment of the balance in cash.
  3. Full payment of the mobility budget in cash.
Impact on the employer

Mobility budget - Impact on the employer

Impact on the employee

Mobility budget - Impact on the employee

Win-win-win

By offering a mobility budget, you, as an employer, meet the wishes and needs of your employees. This does not represent an increase, nor a saving in terms of cost price, as the mobility budget is determined on the basis of the total cost price of the company car. The costs for the management of the mobility budget can be charged to the annual budget for the employee. The employee enjoys flexibility, and can spend his budget in a way that suits his personal situation. The options of a mobility budget are in any case more ecological than a standard company car, often running on diesel.

Do you have any questions about the mobility budget, or do you wish to introduce it into your company? Please don’t hesitate to contact us, it will be a pleasure to make time for you.

Contact one of our experts
Saskia Lombaerts
Saskia Lombaerts
Director Tax & Legal