The mobility budget is taking shape!

Author: Laurence Philippe
Date:

As we already announced in May this year, the mobility budget will shortly come into force. Even though still just at draft bill stage, here is an overview of what you can expect.

What is the mobility budget?

The mobility budget can be applied by any employer that wishes to do so. It enables the employee concerned to give up his or her company car in return for a mobility budget. This mobility budget can be used in 3 different ways, with each use forming a “pillar”.

The budget can be used to opt for a more environmentally-friendly car (pillar 1).

The remaining budget can be spent on financing sustainable methods of transport (pillar 2). If some of the budget still remains at the end of the year, it can be paid in cash to the employee (pillar 3).

How is the mobility budget calculated?

The amount of the mobility budget corresponds to the total gross annual cost for the employer of the company car that the employee has given up (total cost of ownership). This includes the tax and social security expenses as well as all expenses related to the company car (financing costs, fuel, etc.)

Who can benefit from the mobility budget?

As with the mobility allowance, the mobility budget can only be implemented if the employer wishes to do so. Similarly, an employee cannot be forced to return his or her company car. In other words, both employer and employee need to want to implement it.

However, all employers will not be able to benefit from the setup. Specifically, provisions have been made for measures to prevent abuse. On the one hand, the employer must have been providing a company car to one or more of its employees for at least 36 months. Specific provisions are provided for recent companies. On the other hand, the employee concerned must have been provided with a company car for at least 12 months during the previous 36 months, but also in the 3 months directly preceding the awarding of the mobility budget.

Unlike the mobility allowance, it is also intended for employees eligible for a company car, i.e. employees in job categories for which provision for a company car is made in the employer’s policy. They must have been eligible for the same periods as employees who actually benefit from a company car.

What is planned from a tax and social security perspective?

Each pillar of the budget is treated differently in terms of tax and social security. This is how the government intends to guide the mobility choices of employees.

In the 1st pillar, an employee opting for another less-polluting company car will enjoy the same treatment in terms of tax and social security as is currently applied to company cars.

The 2nd pillar covers a variety of different sustainable methods of transport. It covers both public transport as well as a wide range of soft mobility options (bicycles, scooters, electric motorbikes, etc.). Organised public transport as well as various sharing solutions (bicycle and car sharing, taxis, etc.) are also part of this pillar.

As well as these sustainable methods of transport, for employees living within a 5 km radius (as the crow flies) of their usual place of work, rent or mortgage interest is included and can be paid with this 2nd pillar.

Opting for this pillar, which brings together various mobility-centred solutions, is strongly encouraged. For this reason, the amounts spent under the 2nd pillar are not subject to either social security contributions or taks.

Finally, if, at the end of the year, part of the budget remains unspent, it will be paid in cash to the employee. Since the government’s objective is to encourage use of the 2nd pillar, the 3rd pillar is subject to a special social security contribution of 38.07%.

Mobility budget and mobility allowance: what’s the difference?

The mobility allowance, also called cash for car, came into force on 1 January 2018. The mobility budget in turn is due to come into force on 1 October 2018. But what exactly is the difference between the two measures?

Here is a short breakdown that should help to clarify things:

 

Mobility allowance

Mobility budget

Entry into force

1 January 2018

1 October 2018

Objective of the measure

Enable an employee to give up his or her company car

Encourage intermodality (car and other methods of transport)

Compulsory for the employer or employee

No

No

Already has a company car

Yes*

Yes or eligible for a company car

Return of company car

Required

Required, but possible to opt for a more environmentally-friendly car

Calculation of the amount

Catalogue value of the returned car x 20% x 6/7 (or 24% with fuel card)

Total gross annual cost for the employer.

Social security treatment

CO² contribution equal to that of the company car returned

Pillar 1: CO² contribution on the company car

Pillar 2: No social security contributions

Pillar 3: Special social security contribution of 38.07%

Tax treatment

Taxes on a portion of the mobility allowance:

Catalogue value x 6/7 x 4% (minimum €1,310 in 2018)

Exemption for rest of allowance

Pillar 1: Company car benefit-in-kind

Pillar 2: Exemption

Pillar 3: Exemption

Is the mobility budget more advantageous than the mobility allowance?

It depends!

Only the mobility budget enables your employee to opt for a more environmentally-friendly car. The budget remaining after opting for such a car can, at least for the most part, be used under the fully-exempt second pillar. However, the third pillar is discouraged, with the application of a special social security contribution of 38.07%.

However, if your employee wishes to definitively give up his or her company car, the mobility allowance will, in principle, be more advantageous since it is treated in a similar way as a company car for tax and social security purposes. However, if the employee gives up the company car in favour of a mobility budget mainly devoted to the third pillar (cash payment), the employee will be penalised.

The choice between these two measures must be examined on a case-by-case basis.

The wait is nearly over…

The draft bill on the mobility budget in our possession is due to come into force on 1 October 2018. A royal decree will also be required to determine how the mobility budget is to be managed.

*Changes are already in the works for the mobility allowance

A change to the mobility allowance (cash for car) has already been proposed. The system that allows employees to give up their company car in exchange for an amount of money that is subject to beneficial treatment in terms of tax and social security is due to be made more flexible.

It is primarily the measures aimed at preventing abuse by new employees that would be abolished. In this way, not only would employees that actually have a company car be able to return their car, but employees eligible for a company car would also be able to benefit from “cash for car”.

As with the mobility budget, it will be possible to adjust the amount of the mobility allowance following a change of job or promotion.

This should enable a greater number of employees to benefit and make this measure more attractive.

Sources: Draft bill concerning the introduction of a mobility budget; Draft bill amending the law establishing the mobility allowance introduced by the Law of 30 March 2018.

The Partena Professional website is a channel for making information available in an understandable form to affiliated members and non-members.

Partena Professional strives to provide up-to-date information and this information is compiled with the greatest care (including in the form of Infoflashes).

However, as social and fiscal legislation is constantly changing, Partena Professional cannot accept any liability for the correctness, the up-to-date or the completeness of the information consulted or exchanged via this website.

Further provisions can be read in our general disclaimer that applies to every consultation of this website. By consulting this website, you expressly accept the provisions of this disclaimer. Partena Professional can unilaterally change the content of this disclaimer.