Will the Mobility Allowance or “Cash for Car” be a valid alternative to the company car?
Updated on 23 January 2018
The Belgian government set itself a very ambitious goal to create a shift in mobility behaviour by providing an attractive alternative for the current company car schemes, adding that such alternative would need to be cost neutral for all parties involved.
First analysis of the mobility allowance
The bill implementing the “Cash for Car” measure (mobiliteitsvergoeding | allocation de mobilité) is currently going through the legislative process. See "Cash for Car news" below for the latest status of the bill.
There are many aspects associated to the Mobility Allowance, including social security, personal income tax, labour law and corporate tax.
Deloitte made a first assessment to evaluate if the Mobility Allowance indeed strikes the correct balance between the interest of the employee and employer. Will the measure create a change in mobility behaviour, while at the same time respect budget neutrality?
Download the report:
The report is based on the current status of the bill, which may be subject to amendments throughout the legislative process. 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 2018: 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.