Will the Mobility Allowance or “Cash for Car” be a valid alternative to the company car?
Updated December 2018
The government sets itself a very ambitious goal to create a shift in mobility behaviour by providing, what they feel is an alternative for the current company car schemes, with the aim for such alternative to be cost neutral for all parties involved.
Analysis of the mobility allowance
The law of 30 March 2018 (Dutch | French) introduced the Mobility Allowance or the “Cash for Car” measure. The law has a broad scope of the measure covers social security legislation, personal income tax, labour law aspects and corporate tax. On 3 December 2018, a draft law (Dutch | French) was introduced to update the law of 30 March 2018.
To evaluate if the Mobility Allowance indeed strikes the right balance between the interest of the employee and employer, each organization will need to make an assessment.
Will the measure create a change in mobility behaviour, while at the same time respecting budget neutrality?
The report is compiled while legislative changes remain upcoming. Hence, the information should be handled with caution and should not be considered as professional advice. Before making any decision or taking any action that may affect your finances or your business, please consult a qualified professional adviser.
Cash for Car and other employee mobility news:
23 January 2018: Company bicycle and upcoming legislative changes
Following the law of 22 October 2017, a Circular letter was published on 16 January 2018 (Dutch | French) confirming that a speed pedelec should be considered a company bicycle for income tax purposes (in line with the legislative changes dated 22 October 2017).
The Council of Ministers approved a draft Royal Decree on 14 December 2017 to align both the social security and tax treatment of a company bicycle.
12 January 2018: Draft law deposited with Parliament
This marks the Cash for Car measure’s entrance into the legislative process and closer to its anticipated enactment.
18 November 2017: Council of State issues advice
On 14 November 2017, the Council of State provided the Finance Minister with its formal advice on the pre-draft bill.
The Council of State has serious concerns and believes that the pre-draft is “problematic”, specifically in relation to its compliance with the constitutional equality and non-discrimination principles. They ask that the pre-draft text be reviewed fundamentally in this respect.
In addition, the Council of State also doubts the actual effectiveness of the regime.
Various details of the pre-draft bill are being questioned from a non-discrimination perspective. The difference in treatment between employees with a car and those without one, as well as the difference in tax treatment between the regular salary and the mobility allowance, raises serious concerns. The Council of State expects the Minister to provide a much more detailed reasoning to justify this difference.
Based on the information available, it is yet unclear if full consensus has been obtained from the competent authorities on Employment Law and Social Security. Such agreement is an absolute minimum to guarantee the allowance's exclusion from the definition of salary, e.g. to exclude it from social security contributions.
The Council of State also doubts whether the regime is an adequate means to achieve the pursued objective of sustainable mobility. They go as far as doubting the naming itself, hinting that this is more of an ‘exchange allowance’ rather than a ‘mobility allowance’.
While the Federal Government is not bound by the Council of State’s advice, it is clear that the current proposal will need more work. Should the government go ahead and implement the legislation in its current form, it will likely create an uncertain framework for employers to fit this regime into their mobility agenda.
Certainly, at this stage, implementing the scheme as an employer from 1 January 2018 does not seem feasible.
Deloitte quoted by Trends and Trends-Tendances
Donald Niesten, Global Employer Services Partner within Deloitte, was interviewed by the Trends (Dutch) and Trends-Tendances (French) magazines regarding the "Cash for Car" measure.
Read more in:
(Above articles made available with the Roularta Media Group's kind permission)
Deloitte Company Car Calculator
Click the below image and either calculate your company car benefit-in-kind or the financial impact of opting for a Mobility Allowance