On 3 December 2021, the Law of 25 November 2021 regarding the tax and social “greenification” of mobility was published in the Belgian Official Gazette. This law introduces a number of measures aimed at reforming the tax and social security regime of company cars with a view to fostering greener mobility. It also ushers in important changes to the mobility budget.
Read more in this blog on what the mobility budget is and what types of mobility solutions it contains, and what the changes are from 1 January 2022.
What is the mobility budget?
The system allows employees to exchange their (right to a) company car for a mobility budget, which the employee is free to spend on various (environmentally friendly) mobility solutions which benefit from favourable tax treatment. The amount of the mobility budget is based on the total cost of ownership (TCO) of the company car exchanged in return for the budget.
These solutions are subdivided into three pillars, namely:
- Environmentally friendly car (pillar 1);
- Sustainable transportation solutions (pillar 2). These solutions include transportation options such as bikes and scooters, public transportation, shared mobility (car-pooling, etc.) and even housing costs under certain conditions.
- Cash payment (pillar 3). This corresponds to the portion of the budget that has not been spent on pillars 1 and 2.
What are the changes?
As from 1 January 2026, only cars that do not emit carbons are considered environmentally friendly company cars in pillar 1. The zero carbon emission condition also applies to all motorised vehicles in pillar 2 (e.g. scooters, carpooling, car sharing, etc.). In other words, it will no longer be possible to use the mobility budget for a hybrid car.
Other measures apply as from 1 January 2022:
- Extension of pillar 2. The law provides for the extension of the second pillar with new initiatives, such as public transport subscriptions for family members and parking costs associated to public transport. The employer is now also obliged to offer at least one mobility option as part of the sustainable transport solutions of pillar 2. Past experience teaches that very few employers included pillar 2 in their mobility budget offers to employees.
- Waiting period repealed. In the past, only employees who met certain conditions were eligible for the mobility budget. Eligibility was subject to the double condition that, at the time they applied for a mobility budget, employees had a company car at their disposal (or were eligible for one) for at least (i) 3 continuous months and (ii) 12 months in the preceding 36 months (period known as the “waiting period”). The waiting period will be repealed as from 1 January 2022. As a result, employees no longer need to have or be eligible for a company car for a certain period before they can opt for a mobility budget.
- Minimum and maximum budget introduced. Under the new law, a minimum and maximum amount for the mobility budget has been introduced. The minimum mobility budget will amount to EUR 3,000 per calendar year, and max out at 20% of an employee’s gross salary, with an absolute cap of EUR 16,000 per calendar year.
- Deduction of professional use of the company car from the mobility budget: The mobility budget used to be determined on the basis of the company car’s TCO, including costs for professional use of the mobility budget. Now, employers will have the right to deduct costs of professional use of the company car from the mobility budget, provided that said costs are reimbursed separately, on top of the mobility budget.
- Lump-sum calculation of budget and mobility spendings. Finally, the new law makes it possible to calculate the budget and the mobility spendings under pillars 1, 2 and 3 on a lump-sum basis. This optional system should ensure a significant simplification of the system.
A Royal Decree needs yet to be adopted in order to determine the calculation formula to be used. The Finance Minister’s cabinet informed us that no Royal Decree is expected before the spring of 2022. Pending the adoption of this Royal Decree, the current budget determination based on the actual TCO of the company car therefore remains applicable, just as consumption of the mobility budget needs to be determined on the basis of actual mobility costs under pillars 1, 2 and 3.
A new occasion to rethink mobility policies?
The change in law triggers a new momentum for employers to rethink their mobility strategies. Employers may well consider introducing a mobility budget as a way to foster environmentally friendly mobility solutions for their employees.
The announced changes to the mobility budget will add flexibility to the introduction of such solutions: the waiting period is here no more, making more employees eligible. The calculation of the budget and spendings on a lump-sum basis should also, as soon as the Royal Decree has been published, simplify implementation of the budget for HR and mobility managers.
Authors: Julien Hick and Heleen Franco
