Mobility budget and taxes: what’s up with that?

Are you considering introducing the mobility budget in your company or are you thinking of exchanging your company car for the mobility budget? Then it is useful to know how much taxes you have to pay on this (Spoiler: it is very advantageous).

The mobility budget has three pillars, each pillar is taxed in a different way. Mbrella gives you a handy overview of the tax per pillar for both the employee and the employer. Tip: if you first want to know more about the mobility budget, I recommend this article: Everything about the new mobility budget.

A first giveaway before we deep further into the details: the mobility budget is cost-neutral for the employer. Yes, you read that right: the implementation of the mobility budget does not entail any additional costs. This is because all costs of the company car are converted into an equivalent amount to be outsourced, called the mobility budget.

Pillar 1: Environmentally company car 🚗

The environmentally car from the first pillar, follows the tax regime of the traditional company car. What does that mean?

Benefit all kind

If an employee opts for an environmentally company car, he will be taxed on this like all company cars in Belgium. The employee therefore pays a tax via the principle of 'benefit all kind'.

This is a tax that the employee must pay on other benefits received in addition to their wage. The employee pays this tax based on the CO2 emissions, the value and the age of the company car.

Because the Pillar 1 car is more environmentally friendly, the tax is often lower compared to the original company car. This advantage will only increase, because the prices of electric cars fall over the years.

Social Security contributions

As with all company cars, the employee does not have to pay social security contributions. In addition, the employee may also be entitled to a tax exemption of 430 euros (tax year 2023) if two conditions are met:

1) Firstly, the professional costs must be declared in the personal income tax at a fixed rate

2) Secondly, the employer may not provide an extra contribution on top of the mobility budget for home-work trips by public transport or the communal transport of staff members.

The employer must pay social security contributions in this pillar. These solidarity contributions are determined on the basis of the CO2 emissions of the company car. In addition, the employer is also taxed via 'rejected expenses' in the corporate income tax. If the employer only pays for the company car, this corresponds to 17 percent of the benefit all kind. However, this is 40 percent if the employer pays for the company car and the fuel costs for personal use. This, for example, via a fuel card. Although these contributions and taxes do not differ from the traditional company car.

The environmentally company car therefore has the same tax regime and the same regulation as the traditional company car.

Pillar 2: Sustainable transport modes and housing costs 🛴🚲🚌🚆🏠

Expenditure on sustainable modes of transport is completely exempt from taxes and social security contributions for both the employee and the employer. These expenses are therefore fully deductible professional expenses for the employer. For the employee this is pure profit!

Also, expenditure on housing costs is completely exempt from taxes and social security contributions. Otherwise, net pay is used to fund these costs, with taxes and social security contributions already taken into account. So this is not the case now!

An example

A single clerk with a gross salary of 3000 euros per month has to pay a monthly rent of 800 euros. The employee can choose to pay his rent through his/her wage or through his mobility budget.

1) The employee chooses to pay the rent with his/her wages. The employee must then pay a social security contribution of 13.07% on top of the 800 euros and a payroll tax of 179.61 euros on this monthly rent. This means that the rental cost is 1084.17 euros.

2) The employee chooses to pay the rent with his/her mobility budget. In that case, the employee does not have to pay any social security contribution, payroll tax or any other tax on top of the 800 euros. The rental cost then only consists of the actual rental price of 800 euros.

In this example, payment via the mobility budget is 284.17 euros cheaper than payment via wage.

Pillar 3: Cash 💶

This pillar is completely tax exempt. But a social security contribution of 38.07 percent is paid on this payment. This pillar is therefore much less interesting for the employee than the two other pillars. It is advisable to use the mobility budget as much as possible in Pillar 1 or Pillar 2. Pillar 3 is only paid out at the end of the year or a residual amount is paid after the employee's last working day.

For the employer, this third pillar is a fully deductible professional expense.

Summarized, the mobility budget is certainly interesting for the employee and the employer. From a financial point of view, a mobility budget is more advantageous for the employee than the traditional company car. For the employer, the implementation of the mobility budget is a cost-neutral operation. Don't forget that the mobility budget is also more sustainable and flexible than the traditional company car 🤩.

Do you have questions about this article? Let me know at jeroen@mbrella.eu