29 August 2018

Green light for the mobility budget!

The agreement in principle on the mobility budget has now been converted into a draft text and approved by the Council of Ministers at first reading.

The mobility budget will coexist with the recently introduced mobility allowance (or "cash for car" principle).  Both systems show similarities, but also some striking differences. Our advisors are happy to give you the general outlines.

Target group

Dual freedom of choice

The same double freedom of choice as for the mobility allowance lies at the basis of the mobility budget.

Employers decide for themselves whether or not they wish to offer their employees a mobility budget and may attach conditions to this. The employee decides whether or not to accept the offer. Unlike the mobility allowance, the mobility budget is not only accessible to those who have a company car at their disposal, but also to those who are eligible for it. 

Minimum periods

Only employers who have already made one or more company cars available to their employees for an uninterrupted period of at least 36 months prior to the introduction of the system can introduce the mobility budget.  As in the case of the mobility allowance, an exception is made for starting employers.

In order to qualify, the employee fulfil  the following points at the current employer:

  • continuous possession or eligibility of a company car for a period of at least three months at the time of application;
  • and have/have had a company car available for at least 12 months or are eligible for a period of 36 months prior to the application.

These minimum periods shall not apply in the event of recruitment or if the promotion or change of function took place before the entry into force of this Act.

Budget

The real annual employer's cost of the company car determines the size of the mobility budget. This so-called 'total cost of ownership' (TCO) includes the financing cost of the car, but also all costs for fuel, insurance, non-deductible VAT, etc. It is still unclear how the TCO should be calculated.

The mobility budget is not a static figure. For example, a promotion that places an employee in a higher vehicle category will have a positive impact on the size of the budget.

Budget spending

Employees can spend the mobility budget in three pillars, each with its own social and fiscal treatment.

Pillar 1: a company car

This car must be at least as environmentally friendly as the one you give up or for which you are eligible. In addition, the vehicle must meet certain minimum standards.  For example, CO2 emissions amount to a maximum of 95 g/km.

The car undergoes the usual social and fiscal treatment of a company car.

Pillar 2: sustainable transport modes and services

The mobility budget also includes (moped) bicycles, possibly electrically powered, and so-called locomotive equipment (step, monowheel, etc.), while employees can also finance public transport and partial solutions (bicycle and car) from the available budget.

The proximity factor shall also be taken into account.  Those who live within a radius of 5 km from work will be able to pay the accommodation costs (rental costs or mortgage interest) via the budget.

The budget that the employee spends on this pillar will be fully exempt from social security contributions and taxes.

Pillar 3: Remaining balance in cash

The employee receives the portion of the budget that is not spent in pillars 1 and 2 at the end of the year in cash.

This balance is exempt from tax but is subject to a special social security contribution of 38.07%, payable by the employee.

Duration

The allocation of the mobility budget ends on the first day of the month in which the employee holds a position to which no company car is connected anymore.  

Date of entry into force

The target date for the entry into force of this new measure is 1 October 2018.

Tax

Employment & benefits

Accountancy

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