Constitutional Court annuls cash for car allowance - Now what?

In a judgment of 23 January 2020, the Constitutional Court annulled the Act of 30 March 2018 on the introduction of a mobility allowance (cash for car), although the act will remain in effect until 31 December 2020 at the latest. But what exactly does this mean?

Employers who have introduced the cash for car system and their employees are today facing some uncertainty, partly because the judgement of the Constitutional Court, and its practical impact, is not entirely clear.

What is already clear is that the judgement of the Constitutional Court means that, unless the legislator intervenes, the cash for car system will definitely disappear as of 1 January 2021. Whether the legislator will intervene and what the (constitutionally compliant) version of the cash for car legislation will then look like is a matter for speculation. Unfortunately, there is also a lack of clarity on certain important points.

First, what will the consequences be for workers who have already joined the cash for car system? It can already be deduced from the judgment and the considerations of the Constitutional Court that employees who are already in the cash for car system can remain in it until the end of 2020. Even though the judgement of the Constitutional Court does not explicitly state this, it seems defensible to us that anyone who has signed a written agreement to join the cash for car system before the judgement of the Constitutional Court becomes effective can be considered to have joined the cash for car system. And this is also the case if the employee has not yet received any cash for car compensation on the date that the judgement enters into force (the date of publication of the judgment in the Belgian State Gazette).

Second, what will happen to these employees at the end of 2020? For these employees, we advise that an alternative arrangement be put in place in good time with clear, written agreements. The three main options at present are: joining a mobility budget; again making a company car available; or granting an alternative benefit such as a gross cash payment that for tax and social security purposes would be treated as salary.

Third, can employees who are not yet in the cash for car system still join if their employer had introduced the system within the company prior to the entry into force of the judgment? The judgement of the Constitutional Court is not clear on this point. Whether and when more clarity will be forthcoming is uncertain. Caution therefore seems appropriate. Joining the cash for car system is still possible at least until the judgment is published in the Belgian State Gazette. The question whether joining after the publication of the judgment – and before the end of the year – is still possible is open to discussion. A positive answer can certainly not be ruled out. Of course, the question remains whether joining for such a short period still makes any sense.

To be complete, we wish to emphasize that the mobility budget remains in place and the ruling of the Constitutional Court only nullifies the cash for car legislation.

Action point

For employees who have already joined the cash for car system, we recommend that an alternative scheme be worked out before the end of the year, effective from 1 January 2021. Employers would be wise not to accept new entrants to the cash for car system after the entry into force of the Constitutional Court’s judgement.