Belgian lawyers' comprehensive guide to the mobility budget
Belgian lawyers Peeters Law explores the new "mobility budget", including to whom it applies, what it can be spent on and the conditions for introducing it.
On 1 March 2019, the so-called "mobility budget" was introduced in Belgium. The Mobility Budget goes far beyond the mobility allowance: It gives employees who have, or are entitled to, a company car the option to receive an annual mobility budget equivalent to the entire annual cost of their corporate vehicle at no extra cost for the employer.
That budget can be spent on various mobility modes in order to facilitate a smoother and more environmentally-conscious commute or on housing costs if the employee lives within a radius of 5 km from the normal place of employment.
The mobility budget that is now being introduced offers wider mobility alternatives to the previously introduced mobility allowance (cash for cars). Cash for cars and the mobility budget will co-exist.
Below is an overview of the conditions for the mobility budget.
What is the mobility budget?
The mobility budget is the amount the employee receives from his employer in lieu of the company car that they either possessed or were entitled to. The mobility budget can also be used for several mobility solutions at the same time or for housing costs under certain conditions.
Each employee who receives a mobility budget will be able to organise his mobility for commuting to his work. As further explained, this system will make it possible to combine all kinds of mobility solutions, for example, a more economical company car with a bicycle or other means of transport, carpooling, public transport, etc.
The mobility budget amount has to be equal to the annual total cost of ownership of the company car for the employer, all costs included in accordance with the company car policy, such as financing costs, fuel costs, the social security solidarity contribution due, taxes, etc.
When the company car is owned by the employer, the financing costs are replaced by an annual depreciation of 20%.
Employers who grant the mobility budget to their employees are no longer required to intervene in the costs of commuter traffic. They are free to pay these travel expenses, but these expenses are then considered as a normal salary subject to social security contributions and withholding tax.
Free to decide
As for the mobility allowance, the employer freely decides whether to introduce a mobility budget system and freely determines the conditions under which this mobility budget will be introduced. They are required to communicate the conditions to employees at the very latest when setting up the system.
Employees also have the right to decide whether or not to opt for a mobility budget.
Conditions for introducing the mobility budget
As for the mobility allowance, the employer can only enter this budget if they have made one or more company vehicles available to one or more employees for an uninterrupted period of 36 months immediately prior to the introduction of the mobility budget.
For start-up companies who have been active for less than 36 months, this minimum period is not required. However, employees must have been eligible for a company car for at least 12 months.
In turn, the employee must, in order to be eligible, have had a company car or been entitled to a company car for at least 12 months during the past 3 years, including 3 months uninterruptedly, before the application. When starting in a new job in which a car is part of the salary package, this condition does not apply.
In the event of a change of function or promotion, the mobility budget may be increased or reduced when, because of this change or promotion, the worker belongs to a category of functions for which the employer’s salary system respectively provides for a higher or lower budget.
What can the mobility budget be spent on?
Employees can spend the mobility budget in 3 pillars, each with its own social and fiscal treatment.
Pillar 1: An environmentally sustainable company car
The mobility budget can be used for a company car, but not every car is eligible. The car that the employee chooses within this pillar must be environmentally sustainable and is subject to the same social and tax treatment as the "normal" company car, namely:
- A full-electric car; or
- A car that meets the following cumulative conditions: emitting a maximum of 95 gr / km CO2, as from 2021. A transitional period is provided: 105 gr/km for those who apply mobility budget in 2019; and 100 gr/km in 2020.
- The emission standard for air-polluting substances complies at least with the applicable standard for new vehicles, with the exception of "end-of-series";
- For rechargeable hybrid cars, the capacity of the electric battery is at least equal to 0.5 kWh per 100 kg car weight;
be at least as environmentally sustainable as the car that formed the basis for the mobility budget.
Pillar 2: Sustainable mobility instead of a company car
In this pillar, employees can choose not to get a company car at all and use the mobility budget for alternatives to the car when commuting. Every spending within this pillar is completely exempt from social security contributions and withholding tax. The commuting alternatives, provided by the mobility budget law are the following:
- Soft mobility: this includes the purchase, rental, leasing, maintenance and mandatory equipment of the following vehicles with a maximum speed of 45 km/hour: bicycles, motorised bicycles and mopeds, electric motorcycles.
- Public transport: the mobility budget allows the employee to finance both subscriptions and transport tickets. Where subscriptions must be in the name of the employee, single fare tickets can be used purely privately by the employee and his family, both for travel within Belgium and within the entire European Economic Area.
- Organised common transport: this is not necessarily organised by the employer, but can also take place via a group of employers or even via third parties. Trips with the office bus can also be financed with his mobility budget.
- Shared transport: carpooling and car sharing, extended to all vehicles with 2, 3 or 4 wheels, whether or not motorised, belonging to a fleet or to a private individual; taxi transport and rental of cars with driver; the rental of vehicles without a driver, for a maximum of 30 calendar days per year. This can be used to rent a car to go on holiday with the family.
- Housing costs: Employees who live within a radius of 5 km from the normal place of employment can finance the rental fees or interest on loans with the mobility budget.
Pillar 3: Payment of the possible cash balance of the mobility budget
The part of the mobility budget that the employee did not use to finance an environmentally sustainable company car and/or sustainable means of transport must be paid to him once a year in cash, at the latest together with the January salary of the following year. This amount will be subject to a social tax of 38,07 % but not to income tax.
Will it work?
This system will encourage employees to exchange their company car and at least to leave their car at home as much as possible and to opt for other more ecological means of transport. But, it remains to be seen whether this scheme will be successful enough. And it is also to be hoped that it will not be too complicated for employers to put into practice.
Mobility budget and mobility allowance (cash for cars) will co-exist but they cannot be combined. The mobility alternatives offered by the first formula are much wider.