As from 1/01/2020, the new corporate tax deduction rules for company cars and fuel expenses will enter into force. In combination with the new WLTP testing norms for vehicles (applicable as from 1/01/2021 for cars registered as from 1 September 2017), these new rules will result in significant additional costs for most companies. In order to mitigate these costs, changes to the current car policies might be required during 2020.  

One of the possibilities is to encourage alternative mobility measures and introduce flexibility in car policies. With this flexibility, employees are able to hand in, downgrade or upgrade their company car in line with their needs and can use this budget for alternative mobility measures or receive it in cash. Flexible mobility was already one of the reward trends in 2019. Employees have different needs and employers want to offer an attractive mobility and compensation package to their employees.   

With the ‘Mobility budget’, which was introduced by the government earlier this year, there is now an attractive possibility to hand in or downgrade the company car and use this budget for a wide range of alternative mobility measures. The outstanding budget can be paid out once a year and exempt from income taxes.

Olivier Vanneste, Director Global Mobility Services, KPMG in Belgium

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

KPMG in Belgium


The ‘Mobility budget’ legislation was not always clear and easy to implement. Therefore, the government introduced a FAQ earlier this year ( clarifying a lot of unclear aspects of the law. This FAQ is updated almost each month. 

One of these clarifications relates to the determination of the mobility budget. Based on the legislation, the total cost of the car should normally be based on an individual basis which is sometimes challenging for employers. The FAQ now confirms that the total cost of a car can also be based on a reference car as long as this is a consistent approach and is used for all employees entitled to a company car. This method should be used for period of at least 3 years.

The FAQ also confirms that parking at a bus or train station can be included in the offering if it is linked with a subscription for public transport. Based on a strict interpretation of the legislation, it was in principle not possible to include parking in pillar 2 of the mobility budget. 

The FAQ also provides further information about the eligibility rules, the procedures and further clarifications on the alternative mobility measures that can be included in the second pillar.

We except that the FAQ will be further updated in the course of the next year.  

At the same time of the ‘Mobility Budget’, the government introduced another law including a few changes to the existing ‘Cash for car’ legislation. With this legislation, employees can exchange their company car for a ‘mobility allowance’, a monthly cash allowance taxed according to the rules applicable for company cars. 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. We have noticed in practice that more and more companies introduce cash for car in their company car policies.  

In addition, a significant number of employers now offer alternative mobility measures to their employees.   One of the most popular alternatives is bike leasing, which is also often part of a Flexible Reward Plan. The bike is fully exempt from taxes and social security in case the bike is regularly used for home work purposes.  20% is considered as ‘regular’ and this has been confirmed in different tax rulings during 2019. Note that the popular electric step is not yet considered as a bike for tax purposes and therefore not yet fully exempt from taxes and social security.  However, income taxes & social security contributions will not be due in case a step is put at the disposal by the employer in the framework of the mobility budget legislation as the step is included in the scope of the second pillar of the mobility budget.