Mobility budget or company car? The choice is yours!

As from 2018, the employee who benefits from the use of a company car would be able to exchange this car for a mobility budget. The government has reached a political agreement on this, but is still drawing up the texts. Still, we would like to briefly expand on the conditions under which this exchange would be possible, the calculation method of the mobility budget and its tax and social security treatment.

Introduction of the mobility budget: free choice

A company car can only be exchanged for a mobility budget when the employer takes the initiative. The employer decides whether a system of mobility budget will be implemented. Only employers who have already been granting company cars for a continuous period of at least three years can implement such a system.

The employee may then freely choose whether he wants to replace his company car by a mobility budget. If he wants to exchange his company car, then he will have to submit an application. As a precondition, the employee is required to already benefit from the use of a company car for a period of twelve continuous months over the past three years and at least three continuous months prior to the application. The employer decides freely whether he agrees with the employee’s application and may impose conditions on this.

Size of the mobility budget

The mobility budget consist of a cash amount which is calculated on an annual basis according to the following formula: list price of the company car x 6/7 x 20 %. If the employee benefited from the use of a fuel card, the budget is increased by 20 %.

The list price is the price of the company car which is exchanged for the mobility budget. The higher the list price, the higher the mobility budget. If the employee paid a personal contribution for the company car, it will be deducted from the list price.

Example:

The employee benefits from the use of a Volkswagen Golf (diesel - registration date DIV: 01/01/2017) with a list price of EUR 28,512.00 and a CO2 emissions rate of 102 g/km. The employer also makes available a fuel card. If the employee exchanges his company car and fuel card, he will receive a mobility budget of EUR 5,865.32 on an annual basis (= EUR 28,512 x 6/7 x 20 % increased by 20 %).

Social security and tax treatment of the mobility budget

The mobility budget will not be liable to normal employer and employee contributions. As is the case for a company car, the employer will have to pay a solidarity contribution which is calculated on the basis of the data of the company car that is exchanged for a mobility budget. The employee on his part, is not liable to pay social security contributions.

By analogy with the taxable benefit of the company car, the taxable portion of the mobility budget will be determined on the basis of the list price, the fuel used and the CO2 emission rate of the company car which is exchanged for the mobility budget.

Example:

The solidarity contribution for the benefit of the company car as stated above will be EUR 397.08/year.

The taxable benefit for the company car as stated above will be EUR 1,711.00 (income year 2017). The withholding tax amounts to EUR 915.39 on an annual basis (based on a withholding tax of 53.50 %).

The social security and tax treatment of the mobility budget is then as follows:

Next steps

The political agreement has yet to be transposed into legal texts. Therefore, the above information is communicated with reservation. Partena keeps close track of any developments and keeps you informed once the measure becomes more concrete.

Sources: Various press releases.