The Law introducing a mobility allowance has finally been passed!
Despite reservations from the Council of State, on 30 March 2018 a law was passed introducing a mobility allowance, thus realising the aim of the federal government to establish a “Cash for Car” system. This law was published in the Belgian State Gazette on 7 May 2018. Henceforth, it is possible for the employer to organise the return of company cars in exchange for a cash amount that benefits from a preferential (para‑)fiscal treatment that is even more beneficial than the (para‑)fiscal treatment of the returned company car. There are, however, certain conditions that must be met.
The mobility allowance consists in an amount of cash that the worker receives in exchange for the return of his or her company car (“Cash for Car”). The annual amount of the mobility allowance corresponds to 20% of 6/7ths of the catalogue value of the returned company car, to be increased by 20% in case the employer also paid for the workers’ private fuel expenses (e.g., by means of a company fuel card).
The mobility allowance implies the return of the company car, but also the end of all the advantages related to the company car (fuel card, insurance, etc.). The mobility allowance must in particular allow the worker to cover his home–work travel expenses, in such a way that all other exemptions on the reimbursement of these travel costs by the employer are no longer granted (apart from some exceptions).
The mobility allowance is established on a voluntary basis, both on the part of the employer and of the worker, but certain conditions must be met. Thus, the employer can in principle only establish such a system if he has placed company cars at the disposal of his workers for an uninterrupted period of 36 months immediately prior to introduction of the mobility allowance. Furthermore, the worker must in principle have had a company car at his disposal from his current employer for an uninterrupted period of 3 months prior to his request and for at least 12 months of the 36 months prior to his request.
The returned company car can not be linked to a total or partial replacement or conversion of the worker’s salary or other benefits. In other words, company cars that have been placed at workers’ disposal in exchange for a salary cut, as well as company cars resulting from cafeteria plans, are in principle excluded from this new system.
The mobility allowance is not subject to normal social security contributions, but a solidarity contribution (CO2) remains due on the returned company car. In tax matters, the mobility allowance is taxable at a lower basis that corresponds to 4% of 6/7ths of the catalogue value of the returned company car (without this being lower than the minimum amount of the benefit in kind of the company car), the remainder of the amount being tax-exempt!
> Action point
The “Cash for Car” system entered into force on 1 January 2018. Under certain conditions, the employer has the choice whether or not to introduce this system within their company, but its implications must be examined carefully.