The mobility allowance (or cash for car) is a cash amount that an employee receives in exchange for handing in the company car. The allowance is advantageous from a parafiscal point of view. It was introduced on 1 January 2018 as a “green” alternative to the company car.
In its judgment of 23 January 2020, the Constitutional Court rules that the act governing the mobility allowance is contrary to the constitutional principle of equality. The Court rules that there is no reasonable justification for the unequal treatment between employees who receive a freely spendable and parafiscally very advantageous salary because they have handed in their company car on the one hand, and employees who have never had a company car and whose salary follows the normal parafiscal regime on the other. Moreover, the regulation does not provide any guarantee for the mobility problem and a better climate.
Therefore, the act has been annulled, but only as of 31 December 2020. Until then, its effects remain maintained.
What does this mean in practice for employees who have a mobility allowance?
First, few employers and employees have made use of the mobility allowance so far. In 2018, there would have been fewer than 400 employees. These employees can still receive the allowance until 31 December 2020. After that, it is no longer be possible.
Make timely arrangements with the employees concerned about the granting of an alternative benefit to replace the mobility allowance. In our opinion, the following alternatives are possible:
- the mobility budget (see also below);
- the provision of a company car; or
- the granting of a gross cash compensation, from which the normal social security and tax contributions are deducted.
It remains possible to provide in a so-called “cafeteria plan” that an employee who wishes to hand in his company car, can spend the released budget to other alternative employee benefits.
Do not start granting a mobility allowance to employees that would like to enter into the system.
Keep an eye on the legislation: the legislator may be able to add other alternatives by providing for new legislation before the end of 2020.
Is the mobility budget still an alternative option?
The mobility budget was also introduced as an alternative system to the company car, but differs substantially from the mobility allowance. With the mobility budget, the employee who exchanges his company car receives a budget that he can spend in different ways (the so-called pillars). In the first pillar, he can opt for an environmentally friendly car, in the second pillar for sustainable means of transport and housing costs (such as a train pass, a subscription for a shared bicycle, an intervention in rent), and only if a budget remains, is it paid out (as a third pillar).
The ruling of the Constitutional Court does not concern the mobility budget, but because of the similarities between the two systems, the question arises whether the Court's reasoning also affects the mobility budget.
After all, there are certain arguments of the Court that apply to the mobility budget, e.g. the fact that when determining the amount of the mobility allowance, no account is taken of the distance actually travelled between the place of residence and the place of employment, and thus of the impact on mobility and the environment. But there are also important differences. An important criticism of the Constitutional Court is that the employees can freely spent the cash in exchange for the company car. With regard to the mobility budget, this only applies to the "unused" part that forms the third pillar, i.e. not the first and second pillars. Moreover, the parafiscal burden of this third pillar (38,07 % employee contribution) is quite heavy (unlike the mobility allowance).
Moreover, the Court refers in its judgment to the regulation of the mobility budget, when it states that the consequences of the annulled act will be maintained until the end of 2020 in order to allow the legislator to introduce new legislation, insofar as the regulation of the mobility budget is not considered sufficient. This seems to indicate that the Court is not averse to the mobility budget.
Incidentally, no annulment appeal has been lodged against the mobility budget. Therefore, the act could only be referred to the Constitutional Court by way of a preliminary question.
It is also important that the trade unions, who did not support the mobility allowance, are in favor of the mobility budget.
Until further notice, the mobility budget offers a valid alternative for the mobility allowance. Although not a huge success for now, we believe this mobility budget offers several (sometimes still unknown) possibilities. Assess whether the introduction of the mobility budget could imply added value for your company. We can always assist you in this assessment.
