Mobility budget (and changes on mobility allowance) finally entered into force

Christiaan Moeskops 1 March 2019


Last week, the Chamber of Representatives finally approved the draft law of  the mobility budget. The idea of the mobility budget is (just like the mobility allowance) to stimulate employees who have a company car to opt for different means of transportation. Via this way, the government hopes to tackle the mobility problem and to make a positive impact on the environment.

 

Scope of the mobility budget

If the employer chooses to introduce the scheme, the employee may choose to change his car in exchange for a budget based on the Total Cost of Ownership (TCO) of the car handed in. The TCO is the total cost, on a yearly basis, which the employer bears for providing a company car to the employee, including the cost for fuel, insurances, taxes, maintenance, … .

In practice, employees will have the possibility to spend the budget via the following three pillars:

  • Pillar 1: employees can opt to exchange their current company car for a less polluting or a full electric car. The CO2 emission of the chosen car has to be less than or equal to 105 g per kilometer. This amount will decrease in 2020 to 100 g per kilometer and in 2021 to 95 g per kilometer. The eco friendly car will be treated in the same way as any other company car. This means that there is a taxable benefit in kind, a limitation of the corporate cost deductibility (if applicable) for the employer based on the CO2 emission of the car and a CO2 contribution due.
  • Pillar 2: For the remaining part of the mobility budget created by the car handed in by the employee, he/she can choose to use this budget for alternative (and more sustainable) means of transportation, such as a subscription (for commuting purposes) or tickets (for private purposes) for public transport, for a system of car/bike sharing, buying a bike … or even for using the budget to finance a dwelling closer to work (within a range of 5 km). This second pillar is very beneficial as this part of the budget can be provided free of personal income taxes/ social security contributions and would be fully deductible for the employers.
  • Pillar 3: In case there is still budget available (after switching the current company car for a smaller model and/or making use of alternative means of transportation) this will be paid out to the employee in cash each year. This payment is only subject to a special social security contribution of 38,07% to be borne by the employee.

The general conditions to implement a mobility budget are similar as for the implementation of a mobility allowance. Employers should have a company car policy for at least 36 months, unless the employer is a start-up. Employees are only entitled to a mobility budget when they had a company car at their disposal (or they were entitled to a company car, regardless of whether the employee did accept this company car or not) for an uninterrupted period of at least 3 months prior to the request and at least 12 months during the 36 months prior to the request.

 

Some changes on mobility allowance as well

The mobility allowance was introduced last year and was the first attempt of the Belgian Federal Government to get company cars off the Belgian roads. In this scheme an employee can hand over his/her company car in exchange of a mobility allowance, which is valued at 20% of 6/7th of the company car’s catalogue value (or 24% of 6/7th of the company car’s catalogue value if fuel costs for the private use of the company car were borne by the employer).

For income tax purposes, the mobility allowance will be considered as a taxable benefit, valued at 4% of 6/7th of the exchanged company car’s catalogue value. No regular social security contributions are due on the amount of the cash allowance. However, the solidarity contribution that was due by the employer on the exchanged company car will continue to be due after the switch to a mobility allowance.

In order to increase its attractiveness, the Belgian Federal Government introduced some changes regarding the mobility allowance (approved last week by the Chamber of Representatives):

An important change is that an employee will no longer have to drive a company car for a minimum period of 12 months before being able to opt for this system. Having the right to a company car for this period will be sufficient in order to qualify for the mobility allowance.

Other changes are that for new hires the waiting period of one year will be abolished and that in case of a change of function, the employee may be entitled to different mobility allowance based on a higher (or lower) category of company car linked to his/her new function.

Also note that the exclusion of company cars that were provided after a so called “salary sacrifice” (i.e. the employee got a company car after a decrease of his gross salary or loss of other income) is maintained.

 

Entry into force

The mobility budget and the changes on the mobility allowance are foreseen to enter into force as from Today, 1 March 2019.