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A mobility budget is a term often heard in recent years, but what does it actually entail? Is it interesting for an employee and an employer to implement a mobility allowance? And what are the advantages and disadvantages of this new mobility? In this article, we inform you about the changes within mobility schemes.
A mobility budget is a budget that employees receive from their employer in order to finance their travel to work themselves. The amount that the employee receives each month is intended to cover the costs he/she incurs for commuting to work and for any travel to customers and business contacts. The employee may keep the remaining amount. If there is a shortfall, he or she must contribute this amount themselves. The mobility budget focuses on the needs of the employee. They can, within the agreed framework of the company's mobility scheme, decide for themselves how they will travel for work. The mobility budget can be used for a private lease car, a taxi/Uber, public transport, an E-bike or a combination of these. The mobility budget is therefore entirely within the framework of 'Mobility as a Service' (MaaS).
The amount of the mobility allowance is normally based on an employee's position and the associated travel requirement (need to travel). The mobility budget can be paid out to the employee either net or gross. If it is a gross budget, the entire amount is included in the employee's wage tax. Does the employee receive the amount net? Then the untaxed reimbursement of € 0.19 per kilometre applies. This amount is deducted from the mobility budget. The remaining budget is paid out in gross, over which the employee pays income tax.
Example gross/net mobility budgetWith a gross mobility allowance of € 1,000 per month, the employee pays income tax over the entire amount. For a net mobility budget of € 1,000 per month, the number of kilometres driven is taken into account. Suppose that 2,000 kilometres are driven every month, this means 2,000 x € 0.19 = € 380. This amount is deducted from the monthly budget, making the net mobility budget € 620. Only wage tax is paid over this amount.
Benefits for employees→ Freedom of choice. Employees decide how they use the monthly allowance and choose the transport that suits them.→ The remaining amount is paid out as gross salary. When an employee is smart with his budget and its implementation, he/she probably keeps an amount that is paid out as gross salary.→ Employees do not pay an additional tax for a private car.→ Flexibility. Employees can fulfil their mobility wishes at their own discretion.
Benefits for employers → Costs are controllable and therefore easier to manage. The costs are determined in advance, so there are no surprises.
→ Companies are not tied to long-term lease contracts. If an employee leaves early, the company is not left with a superfluous lease car. A personal mobility budget is linked to the duration of the employment contract. → A mobility allowance is an interesting secondary employment condition. The younger generation has an increasing need for freedom of choice. A company that gives them the freedom to choose the means of transport they use to commute to work is therefore in great taste with this young, talented target group.
Disadvantages for employers→ Implementation of a mobility budget. This must be done carefully to create a broad support base within the organisation and to enable a smooth transition. Since the mobility budget is linked to the employee's travel needs, implementation requires a lot of customisation. It is therefore strongly recommended to involve a partner with expertise.
Disadvantages for employees → Whereas the employer benefits from not being bound to the company by lease contracts, the employee is bound to the contract. The employee will therefore have to deal with a BKR registration. The employer must properly inform the employee about the possible consequences of this BKR registration.
Is there a middle ground? Yes, there is. As an employer, it is also possible to consider a mobility budget as an overarching principle. It is possible to have the employee lease a car on a full operational basis. This operational lease amount is deducted from the total budget. If the employee has any budget left over, this can be paid out as a mobility allowance for alternative transport methods. The full operational lease contract is concluded for fewer kilometres, which results in lower monthly costs for the lease car. By means of an agreement between employer and employee, it can be agreed that the employee takes the full operational lease car with him when he (voluntarily) transfers to another employer. In this way, everyone is aware of the need to travel, costs are controlled and all parties have the benefits of flexibility.
Do you have any questions or would you like to know what we can do for you with regard to mobility schemes within your company? Our Mobility Managers are always ready to help you.