With effect from 1 March 2019, Belgian law allows employees to exchange their (eligibility to a) company car for a so-called mobility budget that they can spend on three possible alternative mobility solutions.
After a slow start, recent reports reveal that the mobility budget is cautiously gaining popularity. Recent changes to the applicable legislation, effective since 1 January 2024, aim at further increasing the attractiveness of the mobility budget.
In this newsletter, we briefly summarise the features and the conditions that apply to the mobility budget.
Legal framework – The mobility budget was introduced with effect from 1 March 2019 pursuant to a law of 17 March 2019, published in the Belgian State Gazette on 29 March 2019 and modified from time to time.
The latest changes were introduced pursuant to a law of 28 December 2023, published in the Belgian State Gazette on 29 December 2023 and effective since 1 January 2024.
Amount – The amount of the mobility budget that employees can spend on an annual basis is equal to the annual gross employer’s cost of the company car that the employee is entitled to, including taxation and social security contributions and (if the employer wishes) with deduction of the costs related to the professional use of such company car. The latter costs can however only be deducted if the employer compensates the professional use of the company car on top of the mobility budget.
This amount must be equal to between EUR 3,055 and 20% of the employee’s total annual gross remuneration, without exceeding EUR 16,293 (amounts for 2024, subject to indexation).
Features – The mobility budget allows employees to spend their annual budget on three alternative mobility solutions:
(i) The first alternative consists of putting at the employee’s disposal an environmentally friendly car (e.g. a fully electric vehicle, a hybrid car or a vehicle with low CO2 emissions).
This environmentally friendly car is subject to the same tax and social security treatment as regular company cars.
(ii) The second alternative consists of spending the mobility budget on sustainable modes of transportation within the European Economic Area (such as public transportation, the purchase or lease of bicycles, electric bikes, electric scooters, segways, the use of shared cars, etc.), which are entirely exempt from taxes and (employer and employee) social security contributions. The cost of these alternatives is fully deductible for the employer.
Note that employees living within a radius of 10 kilometers from their place of work can also use their mobility budget to pay the rent of their home or the interests as well the capital repayments that are due in the context of the reimbursement of the mortgage of the home they bought. This alternative option appears to be the most popular in practice.
(iii) As a third alternative, employees can ask that the remaining balance of the annual budget is paid out in a cash amount which is exempt from income taxation but is subject to a specific employer’s social security contribution of 38.07%.
This payment needs to be done at the latest with the payroll of the first month following the corresponding calendar year.
Conditions – The possibility for employees of using the mobility budget is always subject to the initiative of their employer. Employees can only apply for a mobility budget if their employer provides for this possibility.
Moreover, the applicable legislation requires that the employer must have offered one or more company cars to one or more of its employees for a period of at least 36 consecutive months immediately preceding the introduction of the mobility budget. This condition does not apply to employers operating for less than 36 months provided that, at the time the mobility budget is introduced within the organisation, they make one or more company cars available to one or more employees.
Furthermore, employees are only entitled to apply for a mobility budget if they are at least eligible for a company car, i.e. they fall within the categories of employees within the organisation that are eligible for a company car.
Finally, employers are allowed to impose additional conditions, provided that any such additional conditions are duly notified to all employees upon introduction of the mobility budget.
Recent changes – The most recent changes that entered into force on 1 January 2024 mainly aimed at broadening the scope of the legislation to certain individuals in the public sector (including mayors, aldermen and provincial deputies), clarifying certain definitions and concepts in the law of 17 March 2019 as well as the way in which certain amounts referred to in that law need to be calculated.
In doing so, the Belgian legislator hopes to make the mobility budget more appealing for employers and employees and to incentivise them to implement and make use of such mobility budget arrangements.
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Our Employment & Benefits team would be delighted to address any queries you may have in relation to the possibilities of offering a mobility budget to your employees and to assist in setting up such arrangement.
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