Mobility budget
In addition to the ‘Cash-for-Car’ Regulation, the Belgian government implemented the law on the introduction of a Mobility Budget, which enters into force the 1st of March 2019. The main difference with ‘Cash-for-Car’ is that the employee is given the possibility to keep their company car.
Principle
The mobility budget is a budget calculated on the basis of the total annual cost borne by the employer to finance a company car, along with all associated costs, which the employer can allocate as an alternative to the company car.
This mobility budget offers the employee the choice of completely giving up their company car or opting for a combination of a more environmentally friendly and/or cheaper company car with sustainable means of transport and services.
The mobility budget consists of three pillars:
- PILLAR 1
More environmentally friendly car (i.e. the CO2 emissions of the vehicle is, up until and including 31 December 2019, less than or equal to 105 grams per kilometer. As from 2020 this amount will be reduced to 100 g, from 2021 to 95 g, and from 2022 this amount can be further reduced by Royal Decree): the existing tax and social security obligations for company cars apply to this environmentally friendly company car. The remaining budget can then be spent by the employee on Pillar 2 and/or Pillar 3. - PILLAR 2
Sustainable means of transport: in addition, various sustainable means of transport can be used (public transport, shared transport, etc.). Furthermore, the mobility budget can also be used for the rent or interest payment on the mortgage loan of the home if it is within a 5 km radius of the normal workplace of the employee. These sustainable means of transport are tax-free for the employee and fully deductible for the employer. - PILLAR 3
Cash: if the employee has already used Pillar 1 and/or Pillar 2, but has not consumed the full amount of the budget, the employee can receive the remaining budget in the form of a cash amount. This amount is subject to social security contributions of 38.07 % and is fully exempt from taxes. As this amount is considered as salary, the employee builds up social security benefits (pension, sickness, etc.) on the amount.
(Pillars 2 and 3 are 100% tax-deductible for the employer and are exempt from taxes).
Conditions
For the employer:
- The employer has already provided a company car to one or more employees; and
- The use of which should have taken place for an uninterrupted period of 36 months prior to the introduction of the mobility budget. An exception is provided for start-up companies that have not yet been in operation for 36 months but provide company cars to one or more employees.
For the employee:
- The employee benefits from or qualifies for a company car for a period of at least 3 uninterrupted months at the moment they request to exchange their company car; and
- The employee benefited from or qualified for a company car for a period of at least 12 months of the 36 months which preceded their request. An exception is provided for start-up companies that have not yet been in operation for 36 months but provide company cars to one or more employees.
Regulations
The mobility budget may not be allocated to replace all or part of the employee’s salary, premiums, benefits in kind or any other advantage, such as for example a company car, that is allocated to the employee within the framework of a flexible reward plan.
Anti-abuse measure
The mobility budget cannot be combined with other tax exemptions for commuting allowances, neither with exemptions for bicycle allowances, etc.
Career development
The mobility budget, unlike the ‘Cash-for-Car’ system, evolves with the function of the employee. An employee who is promoted to a category with a higher function will therefore also be entitled to a higher budget and vice versa.
Moreover, salary indexation does not have an impact on the mobility budget.
Implementation
The basic principle of the mobility budget is that it is implemented entirely on a voluntary basis by the employee and the employer. The employer is free to introduce the mobility budget for the entire company, for a specific department, or for a specific category of workers in a non-discriminatory manner. Note that the (written) application of the employee is only possible if the employer has introduced the mobility budget into the company.
How can K law assist you?
K law can assist you with the implementation of a mobility budget within your company and with the drafting of the necessary documents in this respect.
Furthermore, K law can help with the assessment of other possible alternatives with respect to mobility.