Mobility Budget in Belgium from 2019
The Belgian government has approved the proposal for a Mobility Budget. This will give employees the right to exchange their company car for an amount of money to be spent on various mobility modes, at no extra cost for the employer.
The measure, which should enter into effect on 1 January 2019, is the end result of a long discussion within the ruling Belgian coalition and with various stakeholding organisations.
Company cars are particularly popular in Belgium because they allow employers to reward their employees more effectively since these company cars are taxed less than an equivalent amount in extra salary. As a consequence, more than 500,000 Belgians drive a company car.
The Mobility Budget is one of the measures designed to reverse Belgians' preference for company cars, and combat the high levels of congestion and pollution that they help to create.
Pending final approval by the Belgian parliament, the proposal offers employees entitled to a company car the option to receive an annual Mobility Budget equivalent to the entire annual cost of their corporate vehicle.
One option is for employees to use this Budget to exchange their company car for a more environmentally sustainable one – either a full-electric model, or one with a low carbon footprint (<95g C02/km), and then apply what's left to various alternative, sustainable mobility modes.
The other option is not to get a company car at all, and use the Mobility Budget in its entirety for mobility alternatives – these include commuting by bicycle, public transport, car-sharing or taxis; or even the cost of moving closer to the place of work (if this makes it easier to use alternatives to the car when commuting).
Any money left after either option will be paid out, subject to a social tax of no more than 38.07%. This system means that neither the employer nor the employee will be worse off than in the 'classic' company car system.
Startup companies and companies who have offered company cars for less than 36 months are exempt from the measure. Employees must have been eligible for a company car for at least 12 months to benefit from the rule.
Cash For Car
It remains to be seen whether the Mobility Budget will be the success that many hope it will be. In March, the Belgian parliament approved Cash For Car, a similar scheme meant to reverse the national tendency to reward employees with corporate cars.
Cash For Car allows employees to give up their company car in exchange for a cash amount, taxed at the same low rate as company cars themselves, providing a net income boost of up to €700 per month.
However, the interest in Cash For Car so far is virtually zero. By mid-July, fully two months after the scheme went live, HR services provider SD Worx reported that no more than 23 employees among its portfolio of 24,000 client companies and a total of around 500,000 company cars have exchanged their cars for cash.
Cash For Car and the Mobility Budget will co-exist. The mobility alternatives offered by the latter formula are of course much wider, making it more appealing. On the other hand, the Mobility Budget will be taxed at a higher rate than the Cash For Car scheme.
Image: tram on the streets in Brussels.