Belgium introduces first European mobility framework

Belgium has become the first country in Europe to introduce a legal framework for mobility budgets under which company cars can be replaced by a greener, broader range of mobility alternatives. The country has around 450,000 company cars and the Belgian government hopes the mobility budget, which came into effect on March 1, will eventually reduce that number by about a quarter.

According to a report in Fleet Europe, corporate mobility is big in Belgium. The country has around 450,000 company cars. The Belgian government hopes the mobility budget, which came into effect on March 1, will eventually reduce that number by about a quarter.

So what does the mobility budget actually entail? 

• Employers may offer a mobility budget to their employees with company cars. Employee participation is voluntary.
• If they do participate, employees get an annual mobility budget equivalent to the annual cost of their company car. 
• They may spend that budget on any or all of three pillars: a replacement car, mobility alternatives, and a cash payment. 
• The replacement car must be ‘green’, i.e. electric or with a CO2 emission no higher than 105g/km (100g/km in 2020 and 95g/km from 2021).
• The mobility alternatives include:
  • the purchase, rent or leasing (plus maintenance) of bicycles, e-bikes, mopeds, electric motorbikes and assorted equipment;
  • subscriptions to public transport (and public parking) and shared mobility (including carpooling, car sharing, bike sharing, taxis, chauffeur-driven cars); and
  • car rental (for up to 30 days a year). 
  • This second pillar can also include corporate bikes and even 
  • the option of financing the rent or mortgage of a house within 5 km of work (as the crow flies).
• Whatever budget is left (if any) will be paid out in cash. This balance is subject to a special tax of 38.07%. 

In January 2018, the Belgian government introduced a ‘Cash for Car’ measure, allowing employees to exchange their company car for a cash payment.

Thibault Alleyn, who heads the consultancy business of Fleet Logistics Group, commented: “The overall interest of Cash for Car with our clients has been very low. For some drivers, the costs and risks associated with car ownership outweigh the net amount proposed in the scheme. Those who could in theory shift to public transport or use a bike are not sufficiently convinced these are viable and comfortable alternatives”.

The presumed incentive was that the cash payment would be taxed at the same rate as the company car, which is more advantageous than paying the same amount as higher wages – this is the reason why company cars are so popular in Belgium.

The average cash payment under the ‘Cash for Car’ measure was calculated as €525 (gross) per month. Alleyn added, “Calculating all direct and indirect costs, this amount would only be sufficient for less than 10% of company car drivers, which again confirms the very limited appeal”.

And, more than a year after the introduction of ‘Cash for Car’, SD Worx, the payroll service provider for one in three privately-employed Belgians, counted no more than 142 employees who had opted for the formula.

However, whereas Cash for Car was aimed mostly at employees with benefit cars, some 42% of all company car drivers in Belgium, the mobility budget formula – by offering both another car and/or mobility alternatives – is also aimed at sales reps, technicians and other employees with job-required cars, which accounts for 41% of the total. The remaining 17% have cars with both benefit and work aspects.

“The mobility budget is a good idea because it answers a real need,” said Frank Van Gool, Director-General at Rental, the Belgian Vehicle Leasing and Rental Association.

“Until now, employees were ‘locked in’ to the use of their company car, even if alternative forms of commuting are actually more efficient.

“It would have been better to make the mobility budget available to all employees, not just those entitled to a company car. Also, all motorcycles except electric ones are excluded, which is a missed opportunity. And it’s virtually impossible to include an electric vehicle (EV) in a mobility budget, due to the high total cost of ownership of EVs.”

Thibault Alleyn concluded: “The mobility budget offers a first fiscal structure to enable intermodal mobility, one of the most commonly heard reasons why corporates didn’t offer this yet.

“Even though this framework is not yet optimal, several clients have been reaching out to us to adjust their car policies and develop a true mobility concept. Based on our business cases, this does make absolute sense and even more importantly, it ensures that organisations have the right focus on internal innovations and a future-proof fleet and mobility setup,” he said.

If you require any further information or advice on the above, please contact Thibault Alleyn on mobile: +32 475 705 755 or email talleyn@fleetvision.biz