Cash for Car: The Council of Ministers approves a preliminary draft bill introducing a “mobility allowance” as an alternative to the company car

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Date:
03 Oct 2017

On 29 September 2017, as proposed by the Minister of Finance, the Council of Ministers approved a preliminary draft bill allowing employees who wish to do so, to exchange their company car for a mobility allowance; provided, however, that the employer has set up such a system within the company.

The mobility allowance consists in a cash amount that the employee would receive in lieu of a company car (Cash for Car). The annual amount of the allowance would be equal to 20% of 6/7th of the catalogue value of the substituted company car. This amount would be increased by 20% where the employee had use of a fuel card.

If the employee has had use of a succession of company cars in the 12 months immediately preceding the granting of the mobility allowance, this would be calculated on the basis of the company car he had as his disposal the longest during those 12 months.

Not only must the company car be given up to receive the mobility allowance, but also any associated advantages (fuel card, maintenance, winter tyres, etc.) would be terminated. The allowance should also cover the employee’s mobility costs, especially those between his place of residence and his workplace. Consequently, no exemption would be granted for travel allowances paid by the employer to meet the costs of commuting, irrespective of the mode of transport used.

According to the information provided by the government, the mobility allowance would have three essential characteristics:

  • it would be implemented on a fully voluntary basis, both for the employer and for the employee;
  • it would enjoy a “competitive” social and tax status, compared with the company car;
  • it would be neutral for all parties: the employer, the employee and the State. None of them should experience a disadvantage or a substantial advantage due to the choice of a mobility allowance.

Today, the preliminary draft has been sent to the Council of State. We will keep you informed of developments regarding this matter.

> Key message 
The “Cash for Car” system could enter into force as of 1 January 2018. According to the current draft, the employer would in any case have the choice whether or not to implement this within the company.