Mobility allowance vs mobility budget

Mobility allowance versus mobility budget: what’s in a name?

Marc Verbeek
01/04/2019
Mobility allowance vs mobility budget

In the context of striving for sustainable mobility, a number of measures have been introduced by the government that should be an attractive alternative to the company car.

The first concerns the mobility allowance that was introduced as per January 1, 2018. This allowance offers employees the opportunity to trade in their company car for a monthly cash allowance = cash for car.

The second concerns the mobility budget that is applicable as from March 1, 2019. The mobility budget means that an employee can trade in his company car up to a certain amount for a more environmentally friendly and cheaper car. The rest of the budget can then be spent on sustainable means of transport such as a subscription to public transport, a car sharing system, a bicycle allowance, etc. Any balance will be paid out in cash at the end of the year.

Now that both measures apply, it is time for a comparative overview.

Comparison of both measures

The award conditions are identical, namely:

  • The employer must have made a company car available to at least one employee for at least 36 months.  Start-up companies that have not been in operation for 36 months can still offer the systems if they already have company cars in their pay packages for 12 months.
  • The employee must have been entitled to a company car for at least 12 months in the 36 months prior to the application, of which at least 3 months must be uninterrupted before the application. 

However, they do not apply when an employee is recruited or promoted or in case of a function change before 1 March 2019.

Furthermore, neither of these measures are mandatory: the employer is not required to offer them and the employee is not required to accept them!

The main differences are in the following areas:

 

Mobility allowance

Mobility budget

Amount

24% or 20% of 6/7 of the catalogue value of the car depending on whether the employer pays for the fuel costs or not

Total cost of the actual car for the employer (= Total Cost of Ownership of TCO) fuel inclusive

Spending

To be spent freely by the employee

To choose freely between 3 pillars or a combination thereof:

-1st pillar: more environmentally friendly car

-2nd pillar: alternative means of transportation (public transport, bike, car sharing, …)

-3rd pillar: cash

Personal income tax

Benefit in kind = catalogue value x 6/7 x 4% (any personal contribution may be deducted)

-1st pillar: benefit in kind on the new car cfr the actual rules

- 2nd pillar: tax free

- 3rd pillar: tax free

Corporate income tax

- Allowance is tax deductible for 75%

- Benefit in kind = disallowed expense for 40% or 17% depending on whether the employer pays for the fuel costs

-1st pillar: limitation of deductibility cfr actual rules

-2nd pillar: deductible

-3rd pillar: deductible

Social security contributions

Solidarity contribution at charge of the employer in function of the CO2 emission of the car turned in

-1st pillar: solidarity contribution at charge of the employer in function of the CO2 emission of the car

-2nd pillar: exempt

-3rd pillar: special social security contribution of 38,07% at charge of the employee

Conclusion

In practice, the two measures will have to be weighed against each other on the basis of the specific situation and it will need to be properly calculated which of the two will be most advantageous.

Marc Verbeek
Marc Verbeek
Tax Consultant
Crowe Spark