Today, the law introducing the ‘Mobility Budget’ has been published in the Belgian Official Gazette. This new legislation allows an employee to hand in or downgrade his company car in exchange for a mobility budget and enters into force on 1 March 2019.   At the same time, another law including a few (minor) changes to the ‘Cash for car’ legislation has been published.

Currently it is already possible to include flexibility in the company car policies: employees can already hand in or downgrade a company car in exchange for other benefits or cash in the framework of a flexible reward plan or a flexible car policy. The pay-out of the balance in cash is however fully subject to income tax and social security contributions and therefore not beneficial.


Current company car: budget of 500 EUR monthly (6000 EUR annually)
Downgrade to new company car with budget of 350 EUR monthly (4.200 EUR annually)
Available budget exchanged to cash: 1.800 EUR gross annually
Net mobility allowance in current system: only 572 EUR
Net mobility allowance with mobility budget (in case only cash): 1.303,68 EUR

Olivier Vanneste, Director Global Mobility Services, KPMG in Belgium

Partner, Head of People Services | Tax, Legal & Accountancy

KPMG in Belgium


Cash for car

The first measure that was introduced by the government in 2018 was the ‘cash for car’ legislation (law of 30 March 2018). With this legislation, an employee can exchange his / her company car for a ‘mobility allowance’, a monthly cash allowance taxed according to the rules applicable for company cars. This system has been criticized by various parties and is not popular in practice. Cash for car is focused on cash optimization and does not provide a choice for alternative mobility measures. In addition, the system results in a high administrative burden for employers and is relatively complex. With the new law, some of the concerns have been mitigated. The eligibility criteria have been adjusted to allow employees who are ‘entitled’ to a company car (e.g. new hires) to opt for the cash for car, without the requirement that they effectively had a company car during a certain period of time.

The 3 pillars of the Mobility Budget

Already during the parliamentary discussions for cash for car, the government decided to introduce a second system: the Mobility Budget. The mobility budget consists of 3 pillars.

Pillar 1: Exchange or downgrade of the company car

The employee should either (1) hand in the company car or (2) downgrade the company car. In case of a downgrade, the employee should opt for an electric car or a car with an emission of less than or equal to 95gr CO2 (this will be gradually introduced i.e. 105gr CO2km for 2019). In case of plug-in hybrids the battery needs to have a capacity of at least 0,5 kWh/100 kg.

The car needs to be ‘at least’ as environmentally friendly as the exchanged car and also needs to meet the other standard emission norms.

The value of the budget will be based on the ‘total cost of ownership’ of the company car i.e.  the actual total gross cost of the company car for the employer. How this cost should be determined in certain cases is not yet clear at this stage and should be further clarified by the government. 

Pillar 2: Alternative mobility measures

The budget should be primarily used for alternative mobility solutions that are paid by the employer.    All these mobility solutions are fully exempt from tax and social security contributions. Pillar 2 includes the following sustainable alternatives:

  • Public transport: a home-work subscription and/or individual tickets which can also be used for private purposes (including for family members, e.g. tickets can be purchased for a train trip to Rotterdam for the entire family). The concept of public transport is broad: a water bus is also considered as public transport.
  • Soft mobility: in first instance all ‘bicycles’ with a speed of less than 45 km/h: all bikes, speed pedelecs, moped bicycles (only if fully electric) but also (electric) steps, monowheels,…;
  • Organized joint transport: this transport can also be organized by a third party (e.g. Office on Wheels);
  • Sharing solutions (car, bike, carpooling, taxi,…) and the rent of a car without driver for a maximum of 30 calendar days (e.g. for vacation);
  • Housing expenses: rent and interest expenses of mortgage loan of a house located less than 5 km from the normal place of work;
  • Bicycles put at the disposal by the employer and the bike allowance for home-work transport.

Pillar 2 is not mandatory. The employee can choose not to opt for any sustainable mobility measures and fully opt for pillar 3.

Pillar 3: payment in cash

The outstanding balance in cash should be paid once a year through payroll (in January). The payment will be subject to a special employee contribution of 38,07% (= equivalent of the 13,07% employee + 25% employer contributions) but will not be subject to income taxes or employer charges.


An employee decides to hand in his company car (with annual TCO budget of 6.000). He chooses several alternative mobility measures in Pillar 2 via a mobility tool put at the disposal by his employer. The outstanding net budget (pillar 3) is 1.477,51 EUR and is paid in cash.

Total TCO budget  6000
Electric bike (leasing)  -1080
Rent of car for 15 days during vacation  -340
Trip to London with family (train) -250
Public transport subscription  -1450
Budget for mobility app (sharing platforms, bus, tram) -840
Outstanding budget  2040
Net cash budget paid in January  1477,51
Total net value  5437,51

Eligibility and conditions

The system of the mobility budget is voluntarily, both for the employer and employee.

The employer chooses if he allows the employee or a group of employees to hand in / downgrade the company car (e.g. for certain functions a company car may be required or he may wish to wait for the end of the leasing contract).

The employee chooses if he wishes to downgrade / hand in his company car and opt for the regime. The request should be filed in writing.

Only employees (or similar) are eligible for this special regime. The regime is also subject to certain conditions and anti-abuse measures for both the employer and the employee.


  • The employer should have been offering one or more company cars to one or more employee(s) for at least 3 years (exception: new company);


  • The employee must have had or has been entitled to a company car OR be entitled to a company car due to a change in job function (promotion) for at least 12 months in the last 3 years and during the last 3 months before the application. These conditions do not apply for new hires.
  • The company car must be linked to his/her function. The mobility budget rules do not apply if the company car was financed by the employee through his gross salary (salary sacrifice) or offered because of e.g. seniority.

The mobility budget is not / no longer available, if the employee:

  • Changes to a job function for which no company car is foreseen;
  • Has a cash for car allowance (the employee can switch between the 2 systems);
  • Has a company car that does not meet the conditions of pillar 1;
  • Has multiple company cars with the same employer.

The employer is no longer required to reimburse the costs for home-work transport (in any case this reimbursement will no longer be exempt from tax (unless it is in the scope of Pillar 2).

KPMG’s observations

The Mobility Budget legislation provides a choice for alternative mobility measures, including a few new tax exemptions for mobility measures (public transport tickets for family members, electric steps,…).  We expect that the mobility budget will be much more popular than the ‘cash for car’ system, but unfortunately the scope of the mobility budget is rather restricted (limited to hand in / downgrade of company car). A number of elements still need to defined (e.g. calculation of TCO budget in specific situations). The government announced that more details will follow by Royal Decree. A Royal Decree about a.o. the communication to be made by the employer has already been published today.

How KPMG can help

Our tax, legal, reward & mobility experts can help with all the aspects related to the implementation of the Mobility budget and a broader Flex Mobility plan, including the following aspects:

  • Practical & legal implementation of the mobility budget
  • Draft of policy and legal documents
  • Web based mobility tool to enable the employee to create budget (hand in / downgrade car), choose alternative mobility measures (Pillar 2) and simulate the impact on his/her net salary (Pillar 3). The web based mobility tool also decreases the administrative burden for the employer.
  • Assistance with the setup of mobility package (Pillar 2): policies, communication, contacts with third party suppliers,…