In a previous contribution, we already informed you that the mobility allowance is a cash amount that an employee can opt to receive from his employer in exchange for his company car. This cash amount is treated in the same way both fiscally and social security wise.
1. Why did the Constitutional Court took this decision?
The Constitutional Court judges that the Mobility Allowance Law introduces an unequal treatment (discrimination) between employees who receive a mobility allowance and those who don't.
Employees who receive the mobility allowance receive, in addition to their wages, a freely disposable mobility allowance that is subject to a particularly favorable tax and social regime, while the wages of employees who do not receive a mobility allowance are fully subject to tax and social security contributions. According to the Court, the legislator does not provide reasonable justification for this.
In addition, the Constitutional Court finds that there is insufficient guarantee that an employee who makes use of the mobility allowance will effectively no longer come to work by car, which is the objective of the mobility allowance law.
The Court relies on the following considerations:
- Because employees are free to use their financial compensation, they can, for example, still purchase a private vehicle and use it for commuting;
- The amount of the mobility allowance is calculated on the list price of the last submitted car, without taking into account the actual mobility requirement of the employee (the number of kilometers between home and workplace);
- For employees with multiple company cars, it is sufficient that they exchange only one company car with the result that they still can combine a company car and a mobility allowance.
2. What are the consequences of this cancelling?
The effects of the cancelled law will be maintained until another legal provision comes into force, and this no later than 31 December 2020.
Employers with employees who already opted for the mobility allowance system have the option to wait for a possible new legal regulation or to replace the mobility allowance by the mobility budget.
The Constitutional Court itself already refers to the mobility budget as a solution. It is good to know that the law that introduces the mobility budget provides for a scheme for the conversion of a mobility allowance into a mobility budget.
The mobility budget gives employees who have a company car or are entitled to it, the option to receive an annual mobility budget equivalent to the annual gross costs of their company car, at no extra cost for the employer. This budget can be spend at the employees own choice on various mobility modes in order to commute smoother and more environmentally conscious or on housing costs if the employee lives within a radius of 5 km from his work. You can read more information about the mobility budget by clicking here.
If you wish to receive more information about this or to be assisted, do not hesitate to contact us (+32 (0)2 747 40 07 or firstname.lastname@example.org).