Company cars and mobility budgets
If you have a company car, you can trade it in for a virtual, sustainable mobility budget.
Mobility budgets are distributed annually to be spent at will on more environmentally friendly company cars and/or
sustainable means of transport and services.
Sound like your thing? Find out about it here.
- Do you have (the right to) a company car? If so, you're eligible for a mobility budget.
- If you don't have any other mobility-related expenses, a mobility allowance is your best option.
- If you compare the actual cost with the net benefit, a company car usually turns out to be more
cost effective than a wage increase.
The Belgian federal government introduced the mobility budget on 1 January 2019 to reduce car use and promote
sustainable means of transport. Employees can take a different approach to commuting by going for
an environmentally friendly company car and using the rest of their budget to buy a bicycle, for example.
Haven’t quite gotten a good grasp on this topic yet?
Stop by the Brussels Motor Show to ask your mobility and tax-related questions.
I'm an employee. Does that mean I'm entitled to a mobility budget or allowance?
Are you working in the private sector and do you have a company car that you also use for private purposes?
Or are you eligible due to your position within the company or in light of the applicable company car policy?
If so, you can request a mobility budget.
Please note: your company's car policy has to have been in place for at least three years
(unless the company is a relatively new one). In addition, you need to have had or
have been eligible for a company car for at least 12 months.
This condition doesn't apply where recruitment or promotions are concerned.
In that case, you can opt for the mobility budget straight away.
Moreover, it's important to keep in mind that employers are not obliged to introduce a mobility budget.
And, if they do, they're also free to decide on the transport means and services available.
Mobility budget: how it works
The disposable amount of the mobility budget corresponds to the annual gross cost your employer pays on the
company car. That means all financing and fuel costs, insurance policies and tax and tax-related liabilities are included.
If your employer owns the company car, the financing costs are replaced by an annual depreciation of 20%.
There are 3 'packages' that you can combine. Your employer has the option of selecting the type of environmentally
friendly cars and sustainable means of transport available to you.
- If you opt for a more environmentally friendly company car it's subject to the same tax rules in
terms of benefits in kind (VAA) and cost deductions.
- If you opt for a sustainable means of transport, it's fully exempt from tax and social security contributions.
- And the remaining balance will be paid out to you. If you still have something left over at the end of the year,
it will be paid out to your account minus the standard 38.07% in social security contributions.
Mobility budget vs. mobility allowance
The mobility budget is an amount that employees receive from their employer on exchanging their company car
for a budget that can be spent on sustainable, greener mobility.
The mobility allowance is an amount that employers pay out monthly in cash to employees who trade
their company car in. Basically, you’re free to spend your mobility allowance as you see fit.
If you aren't planning on spending anything on mobility, a mobility allowance is the best option.
Financially and fiscally-speaking, this option is more advantageous than the mobility budget; however,
it does mean you forfeit your right to a company car for private use. In contrast,
the mobility budget leaves this option open, because you can exchange your 'normal' company car for
a greener model.
Does a company car still seem like the best option?
The new WLTP standard for CO2 emissions causes the benefits in kind to go up.
Is a company car still worth the trouble?
The precise amount of the financial benefit of a company car depends on how often the car is dedicated to
private use and on the agreements with your employer. What kind of car is it?
How many kilometres go towards private use? Have you been assigned a (set limit) fuel card?
Are required to sacrifice a part of your wages? How are damages covered?
Naturally, for company cars, there’s no obligation to pay for your car yourself or take out a loan for it.
You could, however, possibly sell the vehicle you currently own. In addition, there won’t be any unexpected invoices
for maintenance, tyres, repairs, insurance policies (unless a franchise), etc., in your letterbox.
That said, you are obliged to pay a tax on the benefit received, because you are permitted to use the company car
for mileage accumulated during private travel and your daily commute.
This advantage is a Benefit in Kind (VAA), which is a flat-rate fee.
The taxable amount on this flat-rate fee depends on the CO2 emissions produced by the car, the list price, the age
and the type of fuel. You pay tax on that amount based on your marginal tax rate, which is the highest
tranche you are taxed on. As an employee, you aren’t obliged to pay social security contributions on this benefit,
which means it makes no difference whether you have a fuel card from your employer or not.
However, from a tax point of view, having the car coupled with a fuel card could be a nice option.
It’s only if you rarely drive for private purposes or commute by car that a company car might be less advantageous
than alternative compensation.
Weighing the benefits of a wage increase vs. a company car
If you compare the actual cost with the net benefit, a company car usually turns out to be more cost effective
for an employer than a wage increase.
Compared to the gross-net ratio of a conventional wage, a company car usually involves more tax breaks.
Add the social security contributions and withholding tax to of that and a net wage supplement ends up costing you,
as an employer, almost three times as much.
It goes without saying that a company car entails costs as well. And not all costs are fully deductible
(this depends on the CO2 emissions); the VAT, in any case, is only partially deductible and
you are obliged to pay a solidarity contribution (NSSO).
Your employee (or you, if you’re self-employed) also has to pay a light tax on the benefit in kind.
At the end of the day, however, a company car remains considerably more cost effective than a net wage increase.
Where can I find the right CO2 value for calculating my car tax?
The average CO2 emissions are listed in section 49.1 on the certificate of conformity. This is still calculated according
to the old NEDC standard. NEDC is the abbreviation for New European Driving Cycle. It’s currently the only standard
used by the tax authorities. It’s also these average CO2 emissions that are displayed on the labels of
the new cars being exhibited, along with their fuel consumption.
To add more confusion to the mix, section 49.4 of the certificate of conformity also lists CO2 values.
These are the emission values according to the new WLTP homologation process.
WLTP stands for Worldwide Harmonized Light Vehicles Test Procedure.
These WLTP values aren’t currently in force on taxes, but will supersede the NEDC standard in the future.
A transitional period will run until the end of 2021.
Do options and accessories play a role?
As long as your car is subject to the old NEDC tax standard, options and accessories play no role in taxation.
The rolling resistance, determined by the choice of tyres and/or rims, does have a limited influence on the CO2
values of the NEDC calculation. However, their tax-related impact is usually negligible or even non-existent.
However, as soon as WLTP taxation enters into force, options and accessories will impact taxation.
If they have an effect on the rolling resistance, weight and/or the car's drag coefficient,
it will be reflected in the calculation of the vehicle's CO2 emissions.
Do you still have any questions on this topic? Ask our experts and exhibitors at the 2020 Brussels Motor Show!