Federal government reaches agreement on “Cash for Car”

Written by Nicolas de Limbourg 3 July 2017


Recently, an agreement was reached by the federal government regarding the introduction of a mobility budget, as an alternative for company cars. As of 1 January 2018 it would become possible for employees (who already use a company car) to exchange their current company car for a cash compensation, provided that both parties (employer and employee) agree with this exchange.

In principle, the implementation of a mobility budget will become possible for employers who have been providing company cars to their employees during a minimum period of at least 3 years. It is anticipated that there will be an exception for starting companies. Furthermore, it will be required that the employees (who request the switch from a company car to a mobility budget) have been provided with a company car during an uninterrupted period of at least 12 months, of which 3 consecutive months prior to requesting a mobility budget.

The corresponding cash amount (which employees will receive for no longer having the private use of a company car) will be determined taking into account the value of their most recent company car. Moreover, for employees who also have a fuel card, the mobility budget will be increased with 20%. As is currently the case for the benefit in kind of a company car, no employee social security contributions will become due in the hands of employees who will receive a mobility budget. Furthermore, it is anticipated that employees with a mobility budget will face the same tax burden as if they would still have the benefit in kind of their company car.

Because the mobility budget may not be used to replace ‘regulary salary’ or ‘other benefits’, it is anticipated that several anti-abuse measures will be implemented. Once a mobility budget has been established for an employee, the budget can become subject to indexation during the following years. In this respect, the government will request the Belgian social partners to create an indexation mechanism in the upcoming 6 months. If they fail to do so, the government will determine the applicable indexation method.

The mobility budget would be introduced on 1 January 2018 and subject to evaluation after one year.