Navigating the mobility landscape: What is new as from 1 January 2024?

During recent years, mobility has been a hot topic on the agenda of most organizations, as well as of the Belgian legislature. To help businesses keep up with the legislative changes, the summary below includes coverage of a number of changes relating to the legislation on the tax regime for company cars, the federal mobility budget, and company bicycles, which are effective as from 1 January 2024 and which may have an impact on businesses.

For a more comprehensive analysis of what to expect in 2024 and commentary on other relevant changes as from 2024, register for our webinar “2024 tax and legal update for HR, Mobility, Reward & Tax professionals” to be held on 30 January 2024.

Company cars

In 2023, a new tax regime entered into effect for company cars, limiting the tax deductibility and substantially increasing the special employer social security contribution (“CO2 tax”) for non-zero-emission company cars “ordered” (i.e., purchased, leased, or rented) as from 1 July 2023. Aside from a minor increase of the minimum CO2 tax, the changes will only have an impact on zero-emission company cars ordered as from 1 January 2027.

Relevant points regarding company cars for 2024 include the following:

• The tax deductibility for costs associated with non-zero-emission company cars ordered as from 1 July 2023 will not yet be limited. The first limitation, to 75% deductibility, will apply as from 2025.
• For plug-in hybrid electric vehicles (PHEVs) ordered as from 1 January 2023, the tax deductibility of fuel expenses will remain limited to a maximum of 50% (the tax deductibility of electricity costs will continue to follow the tax deductibility for costs associated with the related company car).
• The CO2 tax for non-zero-emission company cars will be increased by a factor of 2.25 (the same factor that applies as from 1 July 2023).
• Cars ordered before 1 July 2023 may still become subject to the new tax regime, under the following circumstances:
  •  Each extension or change of the original conditions of a lease or rental contract as from 1 July 2023 will constitute a new contract date and will trigger the application of the new tax regime, unless an option for the extension or the specific change of the initial contract terms was already provided for in the initial contract. The same treatment applies for the exercise of a purchase option.
  • If there is a transfer of a lease or rental contract to another entity (within the same group) as from 1 July 2023 and an addendum is required to appoint the new lessee, the date on the addendum will determine which tax regime will apply.

If no company car is put at disposal of the employee but a lump sum mileage allowance is paid for the professional use of the employee’s car, the tax deductibility of the allowance will be limited in the same manner as the company car costs for cars ordered privately as from 1 July 2023. For the professional use of a PHEV that is ordered privately as from 1 January 2023, the tax deductibility of the mileage allowance related to the fossil fuel expenses is also limited to a maximum of 50%. Fossil fuel expenses are presumed to amount to 30% of the lump sum mileage allowance.

For entities subject to legal entities tax (category 2 and 3), the new tax regime will apply as from 2026, which will not only have an impact on the cost of newly purchased cars as from that date but will also require an update of the administrative process for the fleet.

For 2024, only the minimum benefit in kind for a company car (i.e., EUR 1,600) is known thus far. The 2024 parameters for the calculation of the benefit in kind of a company car are not yet known. Depending on the decision by the Minister of Finance and the company car, a correction may be required of the benefit in kind for company cars processed in January 2024. 

Home charging of company cars

In 2022, the Minister of Finance articulated the conditions for the administrative tolerance under which the reimbursement of electricity costs related to home charging may be considered as included in the benefit in kind of a company car, namely:

• The home charging station is put at the disposal of the employee by the employer;
• The home charging station is a “smart” charging station (i.e., there is a communication system that allows the employer to monitor the individual consumption related to the car); and
• The reimbursement is specifically provided for in the company’s car policy.

If these conditions are fulfilled, the reimbursement of electricity costs at the actual cost may be considered as included in the benefit in kind of the company car.In a recent statement, the Minister of Finance further clarified how these conditions should be interpreted.

The reimbursement of electricity costs is to be considered as included in the benefit in kind of a company car if:

• A full electric or plug-in hybrid company car is put at the disposal of the employee;
• The car policy specifically provides for the reimbursement of electricity costs related to home charging;
• The home charging station has a communication/identification system that allows the employer to monitor the electricity consumption related to the relevant company car; and
• The reimbursement is based on the actual electricity costs related to the home charging of the relevant company car.

Therefore, it is not required that the home charging station be owned by the employer and put at the disposal of the employee.

 Federal mobility budget

The “mobility budget” is designed to allow employers to offer an alternative to employees entitled to a company car. Employees may exchange their company car for a more environmentally friendly car (pillar 1), a wide range of sustainable mobility solutions (pillar 2), and/or a cash payment (pillar 3).

Over the course of 2023, the legislation on the federal mobility budget has been updated in several respects, and the changes described below are effective as from 1 January 2024.

Calculation method

A royal decree was published in September 2023 on the rules to follow when calculating the available mobility budget and the cost of an environmentally friendly company car within pillar 1. These calculation rules will apply to employees opting in to the federal mobility budget as from 1 January 2024. The contracts of employees who opted in to the federal mobility budget prior to this date will not be affected.

Previously, it had been indicated that the costs related to the management of the federal mobility budget could be included in the costs within pillar 1 (i.e., the environmentally friendly company car). This has now changed. If an employer wants to include these management costs, the costs should be included within pillar 2 (i.e., the sustainable mobility solutions).

For further details on the calculation methods for the federal mobility budget, see our tax alert from 6 October 2023.

Indexation of the budget limitations

It has now been confirmed that there will be an annual indexation of the annual budget limits for the federal mobility budget, i.e., the minimum annual limit of EUR 3,000 and the maximum equal to 20% of the total gross remuneration, with an absolute maximum limit of EUR 16,000. For 2024, the minimum annual limit equals EUR 3,055 and the absolute maximum annual limit equals EUR 16,293. This will require verification that the minimum and maximum limits are respected on several occasions:

• On the date when an employee opts in to the federal mobility budget;
• On the date when an employee changes to another car category (due to a function change and/or promotion); and
• Annually, by considering the indexed amounts.

This should be considered separately from the possibility of providing for periodic indexation by the employer within the policy. 

Updates to the scope of the federal mobility budget

The scope of application of the mobility budget is extended to mayors, aldermen, and provincial deputies. Employees in the private sector and employees and statutory workers in the public sector were already included within the scope of application. Company directors remain excluded.

All sustainable modes of transport included under pillar 2 of the federal mobility budget may be used both in Belgium and in the European Economic Area (EEA). The “EEA” condition is not solely restricted to public transport tickets.

Company bicycles and bicycle allowance

Following the introduction of the general bicycle allowance (based on collective bargaining agreement (CBA) No. 164: Dutch | French) and in the context of the government’s 2021 bicycle action plan, several measures have been introduced that are effective as from 1 January 2024:

• The maximum tax-exempt amount of the bicycle allowance has been increased and will be indexed annually, and will equal EUR 0.35 per kilometer (km) for 2024.
• On an annual basis, the tax exemption will be limited to a maximum of EUR 2,500 per year. Any excess allowance above EUR 2,500 will be considered as taxable income.
• Directors and employees who prove and claim their actual business expenses in their personal income tax return (as opposed to claiming the lump sum cost deduction) may no longer benefit from the exemption for the bicycle allowance or for company bicycles. If granted in 2024, both the bicycle allowance and the free use of a company bicycle will need to be considered as taxable benefits in kind based on the actual value (and will need to be included as such in the salary forms and tax return).

To mitigate the possible cost increase for employers following the introduction of the general bicycle allowance (based on CBA No. 164) and to motivate employers to increase the existing bicycle allowance (in line with the 2021 bicycle action plan), two temporary tax credit schemes have been introduced:

  “Tax credit I”:

• This tax credit is limited to the increase of the bicycle allowance (EUR per km) compared to the reference bicycle allowance (EUR per km) on 1 July 2022.
• The tax credit is limited to a distance of 20 km for a single trip.
• The tax credit is limited to the use of bicycles for commuting purposes during the period from 1 May 2023 to 31 December 2024.
• The tax credit is deductible and refundable.

    “Tax credit II”:

• This tax credit is limited to the increase of the bicycle allowance (EUR per km) compared to the bicycle allowance (EUR per km) on 1 June 2023, considering a minimum reference bicycle allowance of EUR 0.18 per km (to be indexed).
• The tax credit is limited to an increase of EUR 0.05 per km.
• The tax credit is limited to the use of bicycles for commuting purposes during the period from 1 January 2024 to 31 December 2026.
• The tax credit is deductible and refundable.

If the employer already claims Tax credit I, only the excess increase (if any) may be considered for purposes of Tax credit II.

An increase of the bicycle allowance for which the employer already claims a tax credit may no longer be considered as a tax-deductible business expense. If neither of the tax credits is claimed, the bicycle allowance remains 100% tax deductible at the level of the employer.