Two years after its introduction, the Constitutional Court annuls the law on the mobility allowance ("cash for car"). What are the consequences?
The mobility allowance was introduced to address the mobility problem by offering an alternative to the company car.
Employees can exchange their company car (or their entitlement to a company car) for a mobility allowance. This allowance is subject to a favourable tax and social security treatment, competitive with the treatment of the company car.
Constitutional Court ruling
The Constitutional Court has just annulled the mobility allowance scheme.
One of the reasons for doing so is that the mobility allowance does not necessarily lead to fewer cars. Since the mobility allowance can be freely spent, it is not excluded that the employee may use it to purchase a cheaper, smaller car, which in the end does not solve the mobility problem.
Another reason is the unequal social security and tax treatment of wages that cannot be objectively justified. The mobility allowance that replaces the company car is taxed less than ordinary gross pay. Because only those who have a company car can make use of the favourable social security and tax regime, discrimination arises.
Deadline: no later than 31 December 2020
The Court decided that the mobility allowance scheme will remain applicable until 31 December 2020 at the latest, unless new legal provisions enter into force earlier. You can therefore continue to grant mobility allowances until the end of 2020, apart from any new legal provisions.
Whether a mobility allowance can still be granted in 2021, and under what form or conditions, will depend on the political will and consensus to create a mobility allowance "2.0".
However, do not wait for any new legal provisions and already look for alternative solutions. For a concrete analysis of your situation, please contact our Legal Partners by email (email@example.com) or by phone (02/549.30.10).
Mobility budget at risk?
Probably not. In principle, the Constitutional Court ruling has no impact on the mobility budget introduced in March 2019.
Sources: Constitutional Court 23 January 2020, no. 11/2020; various media reports.