Revised position makes the mobility budget even more attractive

As previously communicated, new rules governing the mobility budget came into effect on 1 January 2022. As the original legislation did not initially achieve the desired results, the legislator introduced a number of amendments aimed at making the mobility budget more attractive. Since then, we have seen a steady increase in its popularity.

Although the legislation was amended on 1 January 2022, the mobility budget FAQ was only updated on 1 March 2023. In addition to the expected changes following the 2022 amendments, the revised FAQ also introduced a noteworthy new position on the professional mileage allowance.

As of 1 January 2023, any professional mileage allowance granted by the employer in addition to the mobility budget (provided that the mobility budget includes costs related to the professional use of the company car) will be subject to tax and social security contributions.

This is certainly good news for the budget neutrality of the system and makes it easier for employers to implement the mobility budget.

History

• Initially, it was administratively accepted that employers could grant employees a tax-exempt mileage allowance for business trips in addition to the mobility budget, provided that the employee either:
  • did not choose an environmentally friendly company car; or
  • chose an environmentally friendly company car under Pillar 1 without a fuel card.
• However, following the legislative changes that came into effect on 1 January 2022, it was decided that the costs related to the use of a company car for professional purposes may be deducted from the mobility budget. In that case, the employer must compensate the employee for business travel expenses in addition to the mobility budget (provided the employee does not have a Pillar 1 company car with a fuel card).

This means that an employer may decide to exclude the costs related to the professional use of the company car when determining the Total Cost of Ownership (TCO) amount. In that case, the employer may pay a tax-exempt professional mileage allowance as compensation, but only if the employee continues to make professional journeys after opting for the mobility budget and no longer has a company car with a fuel card.

This approach makes it easier to differentiate between employees who travel extensively for business purposes and those who make few or no business trips as part of their role. For the first group, the employer may choose to exclude the (average) business-use component when calculating the mobility budget and instead reimburse those business kilometers separately after the employee joins the mobility budget scheme, provided the employee does not opt for a Pillar 1 company car.

However, as a result of this provision, the authorities no longer consider it justified for an employee to receive a tax-exempt mileage allowance in addition to the mobility budget when the amount of the mobility budget itself has been calculated on the basis of the full TCO, including costs arising from the professional use of the company car.

To provide greater clarity, the administrative tolerance allowing employers to grant a mileage allowance on top of the mobility budget was abolished with effect from 1 January 2023. As a result, any mileage allowance that is still granted in addition to the mobility budget will be subject to income tax and social security contributions.

Summary

As of 1 January 2023, tax-exempt expenses for professional travel may only be reimbursed in addition to the mobility budget if, when determining the amount of the mobility budget, no account was taken of the costs associated with the professional use of the company car.

In any case, employers retain the option to choose between two methods regarding the reimbursement of professional mileage:

• Total Cost of Ownership (TCO) excluding professional use costs
  The employer may calculate the TCO without taking into account the costs resulting from the professional use of the company car. In that case, a tax-exempt reimbursement for professional mileage can still be granted on top of the mobility budget.
• Total Cost of Ownership (TCO) including professional use costs
  Alternatively, the employer may calculate the TCO including the costs related to professional use. In that case, an additional tax-exempt reimbursement for professional mileage is no longer possible. If the employer nevertheless pays such an allowance, it will be subject to tax and social security contributions.

Conclusion

This revised position makes the mobility budget even more attractive for employers, particularly those with a large number of employees who use their company cars for professional purposes.

Interested in finding out more? KPMG supports organizations with a holistic implementation of mobility budgets and cafeteria plans, covering all legal, tax, accounting, and practical aspects. 

Authors: Kathleen Veugelen, Executive Tax Manager & Céline Maurissen, Tax Adviser