Mobility budget in a nutshell
The mobility budget entails a possibility offered by an employer to its employees to exchange their company car or the entitlement to a company car for a budget. As discussed in a previous article, an eligible employee can use the mobility budget to finance an “environmentally friendly” company car and related costs under the company car policy (Pillar I) or can spend the mobility budget on sustainable transport or other assimilated costs such as housing (Pillar II). If the mobility budget is not fully spent on Pillar I or II, the employee can receive the remaining budget in cash (Pillar III).
How to determine the amount spent in Pillar I?
With respect to Pillar I, the Royal Decree provides, on the one hand, an overview of actual costs (paid by the employer) that should be used to determine the amount spent on the environmentally friendly company car so-called “the formula based on actual costs”. This is the first option that the employer can use. The costs include, for example, the lease cost, interest on borrowed capital, maintenance and cleaning costs, fuel costs, parking costs, insurances, costs for replacing and storing of tires, annual depreciation of 20% of the cost price of the charging station and its installation, etc. If certain costs are not yet known at the moment the budget is granted, the employer should estimate the remaining amount. Once the actual costs are known, these costs must be settled in the mobility budget. The list is exhaustive. Please note that these costs can only be taken into account if the financing thereof is foreseen in the company car policy.
On the other hand, employers are given the option to calculate the amount spent on a lump-sum basis. The formula is different depending on whether the company car is leased or owned. In both cases, the lump-sum basis consists of a fixed and variable component that must be added up.
The fixed and variable components are the following:
- For a leased (not a finance lease) or rented company car:
Fixed component: Annual cost of rental or leasing + average annual cost of all costs not included in the rental or leasing contract (provided they are included in the company car policy) + non-deductible VAT + Tax on non-deductible car costs + employer’s CO2 solidarity contribution.
Variable component: (6.000 + home-work distance x 2 x 200) x cost per kilometer provided that fuel costs are not already included in the annual cost of the rental or leasing.
- For an owned company car or finance lease:
Fixed component: Catalogue value of the company car (including tax on the non-deductible part) x 25% + employer’s CO2 solidarity contribution.
Variable component: (6.000 + home-work distance x 2 x 200) x cost per kilometer.
For example: the fixed component for a leased (not a finance lease) company car amounts to € 6.000 per year and the employee’s home-work distance is 10 kilometers. The current cost per kilometer equals € 0,13. In this case, the budget for Pillar 1 will amount to € 7.300 per year, i.e. (€ 6.000,00 + ((6.000 + 10 x 2 x 200) x € 0,13)).
The option is valid for a 3-year period and the employer must in principle choose one option for its employees (i.e. the lump-sum method or the real costs method).
The possibility to opt for lump-sum formulas allows employers to calculate the mobility budget for environmentally friendly company cars more accurately since not all the information might be available to determine the actual costs thereof.
How to determine the mobility budget?
The amount of the mobility budget is in principle determined based on the actual costs mentioned above and corresponds to the annual average gross employer cost of the company car that is being exchanged and that was used by the employee during the last four years. If the company car was made available for less than four years, the amount of the mobility budget corresponds to the annual average gross cost of the entire period. However, the employer can also opt to calculate the mobility budget based on the lump- sum formula which is identical to the lump-sum formula that can be used for Pillar I.
Entry into force
The Royal Decree will enter into force on 1 January 2024.
If you have any questions about the newly published Royal Decree or are interested in considering the new options set out in this Royal Decree, you can contact our Employment and Benefits team.