21 February, 2024

Mobility Budget : new TCO formulas from 01/01/2024

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Recent changes to the Mobility Budget! Starting in 2024, mandatory TCO formulas will start circulating. Read all about it in our blog post.

Mobility Budget : new TCO formulas from 01/01/2024

At Payflip, the flexible reward revolution is underway! And when it comes to flexible remuneration, we can't leave out the Mobility Budget. The Mobility Budget offers an innovative approach to employee compensation, seamlessly integrating mobility into the salary structure.

The Royal Decree of 10/09/2023 defined the 2 methods for calculating the amount of the Mobility Budget, or TCO, applicable from 01/01/2024. Today, we dive into the new waters of the labour landscape, exploring these (re)defined TCO calculation formulas.

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Determining the Mobility Budget: the TCO

The Mobility Budget is determined on the basis of the TCO ("Total Cost of Ownership"), which corresponds to the gross annual cost of a car to the employer. The TCO includes not only the cost of the car, but also a series of factors and expenses such as expenses not eligible for corporate tax, non-recoverable VAT and fuel/energy consumption.

The law already provided that the Mobility Budget, or TCO, could be calculated in two ways:

  • Based on actual company car costs

  • Based on flat-rate costs

Until recently, however, no concrete formulas were available. Thanks to the Royal Decree of September 10, 2023, these formulas are now defined.

1. Actual costs formula

This formula makes it possible to evaluate the actual cost of the car allocated to an employee over the last 4 years of use (or as long as possible if less than 4 years).

In this formula, the TCO is made up of all the actual costs incurred by the employer to finance a company car, as well as the related costs mentioned in the car policy. If the costs are not included in this policy, they cannot be taken into consideration.

An exhaustive list of these actual expenses is available:

  • annual amortisation of 20% of the cost of the environmentally-friendly company car, taking into account invoiced options and accessories as well as discounts granted;

  • interest on borrowed capital;

  • rental or leasing costs;

  • fuel and electricity costs;

  • fuel card or electric recharging administration costs;

  • annual amortisation of 20% of the cost of the charging station and its installation;

  • charging station maintenance and repair costs;

  • charging station and charging cable management costs;

  • toll charges ;

  • car wash, parking and garage charges;

  • replacement car costs;

  • costs of making the vehicle roadworthy;

  • tire replacement, replacement and storage costs;

  • appraisal costs when the vehicle is returned at the end of the contract or when there is a change of driver;

  • repair costs when the vehicle is returned at the end of the contract;

  • insurance costs (including deductibles) ;

  • roadworthiness tests;

  • service management costs ;

  • registration tax ;

  • road tax ;

  • employer's CO2 solidarity contribution to NSSO;

  • non-recoverable VAT on all the above items;

  • corporate income tax on the non-deductible portion of the above items;

  • corporate income tax on the portion of the benefit in kind constituting a non-allowable expense.

We've highlighted in blauw those that are most commonly used in practice.

2. Flat-rate costs formula

The flat-rate costs formula will always be used for employees who do not (yet) benefit from a company car, and who are therefore not giving up an existing car (new appointment, promotion or change of function).

If this formula is chosen, it must be explicitly stated in the Car Policy and the Mobility Budget Policy.

In this second formula, the specific calculation depends on the type of vehicle contract. A distinction is made between :

  • Leased or rented vehicles

  • Owned or financially leased vehicles

In both cases, the TCO is made up of a fixed and a variable component. The fixed component varies according to the type of vehicle, while the variable component remains the same:

Leased or rented vehicles

Owned or financially leased vehicles

Fixed component

Annual rental or leasing cost + average annual cost of all expenses not included in the rental or leasing contract (and included in the car policy)* + non-recoverable VAT + corporate tax on non-deductible car expenses + CO2 solidarity contribution paid by the employer.

Catalog value of vehicle (including tax on non-deductible part of catalog value) x 25% + CO2 solidarity contribution paid by employer

Variable component

(6,000 + commuting distance x 2 x 200) x fuel consumption cost per kilometer, provided that fuel costs are not included in the annual rental or purchase cost.

* For example: fuel costs, extra insurance costs, garage costs, parking costs, carwash costs, etc.

In practice, Payflip notices that the flat-rate method for leasing cars is the most widely used. This method is easy to implement and very transparent for employees.

Want to get started? Download our TCO calculator.

A few principles

  1. The formula chosen to calculate the TCO is applicable for 3 years. After this period, you can decide to change the formula, but this only has consequences for new entrants.

  2. The same formula, whether real or flat-rate, must be applied to all employees in the company. Employers cannot choose "à la carte" between the 2 calculation methods and select the most advantageous situation for each of their employees.

  3. The employer can, however, decide on different methods for calculating the amount of the Mobility Budget and the amount of expenditure under Pillar 1. For example, the first amount will be calculated on the basis of the lump-sum method, and the second on the basis of the actual method. This logic must then be applied to all employees in the company.

  4. The Mobility Budget is an annual budget, granted to the employee on the basis of the number of calendar days during which the employee participated in the Mobility Budget system during the calendar year, regardless of the method chosen. Legally, the minimum budget cannot be less than 3,055 euros and 16,293 euros (indexed amounts for 2024).

  5. The TCO can be calculated per person individually or per category of workers, which is then based on a reference vehicle for all workers in a given category.

  6. These new formulas will apply from 01/01/2024, for new employees entering the Mobility Budget system. Employees already benefiting from the Mobility Budget before this date may keep the TCO already calculated for them (unless they are promoted or change function).

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Payflip makes it easy!

The recently published TCO formulas are a breath of fresh air for employers who couldn't see the forest for the trees. But the issue remains complex. That's why Payflip is helping hundreds of companies introduce the Mobility Budget as part of a flexible pay policy. Payflip's digital tool functions perfectly as the mobility account required by law, and we guide companies clearly through the labyrinth of Mobility Budget rules.

Would you like to find out more about our flexible compensation services? Book a virtual meeting or download our e-book on the Mobility Budget for practical advice on how to introduce it.