Belgium’s government has been discussing the proposal for a mobility budget since 2018, but the new rules were finally announced on 1 March 2019, and published in the Belgian State Gazette. Broadly, the mobility budget introduces the possibility for employees to exchange their entitlement to a company car for cash to put towards more sustainable forms of transport (with certain tax incentives attached).
The mobility budget is distinct from the mobility allowance, which was introduced in May 2018, and which allowed employees to swap their company car for a monthly cash payment to spend as they wished. Both the mobility allowance and the mobility budget were devised as part of a wider strategy to incentivise a culture of environmentally-friendly travel across Belgium but also to decrease traffic congestion in high density urban environments.
Although the new mobility budget legislation was introduced on 1 March 2019, it has not yet been published in Belgium’s Bulletin of Acts and Decrees so employers still have time to decide how they are going to implement it within their company. If you’re an employer in Belgium that offers a company car scheme, now is the time to think about your mobility budget options...
What is the mobility budget?
Essentially, the mobility budget is an option for employers in Belgium to allow employees to swap their company car, or their entitlement to a company, for a cash amount that can be spent on alternative, sustainable means of transport.
What can the budget be spent on?
The mobility budget is built around ‘3 pillars’, each representing an option for the employee: these options can be combined into a mobility ‘package’ should the employee so wish. In more detail, employees may exchange their existing company car for:
- Pillar 1: An electric, eco-friendly car with a CO2 emission level of maximum 105gr/km (that volume limit will be reduced incrementally up to 2021). The car is subject to the same social security and tax liabilities as conventional cars. In contexts where the employee’s current company car is already eco-friendly, the new car cannot exceed the previous car’s emission levels
- Pillar 2: A more sustainable means of transport, such as a public transport pass, a shared transport solution, or an electric bike. That means of transport is exempt from tax and social security.
- Pillar 3: Payment of a cash balance - if there is an amount left over from the budget - at the end of the year. That amount must be paid as a lump-sum by the January salary-deadline of the following year. Worth noting: employees must make a 38.07% contribution to the balance payment (an amount not subject to social security contribution).
How much is the budget?
The mobility budget shouldn’t result in higher costs for the employer. The budget amount should correspond to the total annual costs necessary to finance the employee’s company car, which include additional costs for the vehicle like fuel, servicing, and insurance. The mobility budget differs from the mobility allowance in this way, since the allowance value only corresponds to the catalogue value of the car, not the total cost of ownership (TCO). Accordingly the mobility budget will vary for each employee depending on the total cost of maintaining and using their company car.
If employees do not use a company car but are entitled to one, their budget allowance is determined by the cost of the car they would have chosen (or a reference car appropriate to their job category).
Can every employer offer the mobility budget?
Every employer that offers a company car can opt to offer the mobility budget. Although the mobility budget is not mandatory, employers who choose to introduce it for their employees must meet certain criteria, which are as follows:
- Employers who wish to provide a mobility budget must have already been providing a company car scheme for over 36 months.
- New employers qualify for the mobility budget if they are offering at least one employee a company car when the budget is introduced.
How do employees qualify?
Employees are under no obligation to accept the offer of a mobility budget but, like employers, those who do must meet qualification criteria.
- The employee must have had a company car (or been entitled to one) in 12 months of the 3 years immediately preceding the date of their mobility budget application.
- Must have had that entitlement for a minimum of 3 uninterrupted months immediately preceding the date of their application.
Employees of start-ups don’t need to meet the 36 month criteria, but do need to meet the 12 month and 3 month ‘waiting period’ components. That rule is waived, however, for employees hired after the 1 March 2019 introduction of the mobility budget legislation, so long as those employees are in roles which entitle them to company cars.
How should employers implement their mobility budget?
The mobility budget should be introduced in the same way as a company car scheme - that is, by implementing a collective labour agreement, a company policy, or by making an individual agreement with the employee. Employers who accept mobility budget requests should draft an agreement with their employees before the budget is provided.
If they intend to introduce one, employers in Belgium should make sure their payroll departments are familiar with their mobility budget agreement so that it can be integrated into the pay process.
For more information on tax and social security benefits in Belgium, browse activpayroll’s Global Insight Guide to Belgium.