Looking back on the most important changes in mobility in 2023: A comprehensive recap

Year-End Conclusions on Mobility Changes during 2023

If there is one constant in fiscal legislation, it is change. The reform of the mobility landscape is high on the agenda of the Belgian Government. With the year-end approaching, we want to highlight the most significant changes in the mobility landscape during 2023.
 

1. New circular letter provides extra clarity on the fiscality of company cars

A new circular has been published by the fiscal authorities on the 12th of December 2023, adding some more details and changes to the FAQ published in the previous circular letter dating from the 22nd of December 2021.

1.1 Changes in terms of contract can change applicable tax regime

The order date or the date of the lease/rental contract of the company car determines the fiscal regime and deductibility percentage. In this respect, changes in the rental or leasing contract of a company car can ultimately lead to a change in the applicable fiscal regime. See also our alert of July in this respect.

• If you modify the original terms of a leasing or rental contract, you will establish a new contract date. The new contract date will determine the applicable tax regime. This will however not be the case if the contract initially allowed for modifications with all execution details predetermined.
• If you extend a leasing or rental contract (and the contract  did not initially foresee for an extension or lacked predetermined details for it), the extension will be treated as a new contract with a new contract date. The new contract date will determine the applicable tax regime. The same principle applies to exercising a purchase option.
• Should you transfer a company car and its leasing contract (including an amendment designating a new contracting party) to another company within the same group, the date of this amendment will be considered when determining the applicable tax regime for the car. When a taxpayer initially orders a car, then later opts for leasing instead of direct purchase, the date the leasing contract was concluded will determine the applicable tax regime.
   

1.2 Deduction limit for professional costs

Professional costs related to vehicles bought, leased or rented as from January 1st, 2026, will remain 100% deductible, provided that the vehicle is zero emission. For polluting vehicles bought, leased or rented before July 1st, 2023 the existing deduction regime will be applicable. The same applies for vehicles bought, leased or rented as from July 1st, 2023 until December 31st, 2025, however temporarily (the deductibility will decrease over time until they will no longer be deductible as from income year 2028).

For professional costs related to lump sum mileage allowances for professional trips your employees perform while driving their own plug-in hybrid purchased as from January 1st, 2023 until December 31st, 2025, the deduction limit of all car costs can be defined according to the usual deductibility formula, however with an absolute maximum of 50% for fuel costs specifically. The lump sum mileage allowance is supposed to be related to:

• Fuel or diesel costs for 30 %;
• All other car costs (including electricity) for 70 %.
• Professional costs related to the lump sum mileage allowance of 0,15 euro/km for commuting between the place of residence and the place of work will, as from 2026, only remain applicable for zero emission cars (or polluting cars who still fall under the grandfathering regime).
• Professional costs related to the provision of a car to a third party who uses it for private purposes are deductible according to the deduction rules applicable for that specific car, except for the amount of the benefit in kind and own contribution of the company car.
• Professional costs related to charging stations will remain deductible for 100% (independent of the vehicles using it). As from income year 2030, the deductibility will decrease to 75%
   

2. Emphasis on bicycle allowance (including CBA 164 and temporary tax credit)

In general, the provision of a bicycle by the employer to the employee, as well as the bicycle allowance (for income year 2023, the allowance amounts to 0,27 euro per kilometre), are fully exempted from social security contributions and income taxes when a few conditions are fulfilled (e.g. the employee does not declare real professional costs in the tax declaration, the employee uses the bicycle for commuting purposes).

As of May 1, 2023, the right to a bicycle allowance has been extended with the implementation of a new Collective Bargaining Agreement (CBA 164). The new CBA is interesting for employees who commute on a regular basis to work by bicycle (please read our previous alert for more information in this respect).

To ease the implementation of this new measure and alleviate part of its cost from the employer, the federal government introduced a temporary tax credit, which applies when the employer increases the bicycle allowance for a set period: between the 1st of May 2024 and the 31st of December 2026.

Some important remarks in this respect:

• The tax credit is only applicable for the increase in the bicycle allowance, which is the difference between the allowance effectively granted and a reference amount set on July 1, 2022.
• The tax credit can only be claimed by the party bearing the increase of the allowance. So, if a third-party bear that cost, or reimburses the employer, the employer would not be entitled to this measure.
• The credit only applies to the first 20 kilometres of each commuting trip, and therefore a maximum of 40 kilometres for a back-and-forth commute.
   

3. Changes regarding the federal mobility budget

The federal mobility budget, applicable as of the 1st of March 2019, allows an employee to exchange his/her company car for a budget that he/she can spend on various sustainable mobility solutions, including the cash-out of the remaining balance. A bill from the 19th of October 2023 proposes to bring a few modifications to this law:

• This bill proposes to extend the scope of the mobility budget to mayors, aldermen and provincial deputies, allowing them to also benefit from the mobility budget scheme. However, business leaders remain excluded.
• Spendings within the context of the second pillar can now occur both in Belgium and within the European Economic Area. This precision was in the past only for public transport tickets but has now been extended to all sustainable transport modes in pillar 2 for the sake of coherence and legal certainty.  
• Currently, minimum and maximum amounts are not subjected to indexation. The bill proposes to put a yearly indexation mechanism in place as from January 1st, 2024, to account for possible inflation.

Furthermore, and as already highlighted in our previous alert, on September 29, 2023, a Royal Decree was published to outline the formulas to calculate the amount of spending in pillar 1 and the amount of the mobility budget. From January 1, 2024, the employer will have the choice between two calculation methods.

• a calculation based on the actual costs of the company car
• a calculation based on the lump-sum values.

The employer’s choice is valid for a period of 3 years and must be applied consistently to all employees who exchange their company car for the mobility budget.
 

Conclusion

With so many changes and layers of complexity in the mobility landscape, we advise you to be especially cautious when navigating the fiscality of mobility for the years to come. Please carefully consider all aspects before taking new mobility decisions, seeking compliance, sustainable alternatives and cost efficiency.

If you would like to receive more information about the topics mentioned in this article or wish our assistance in any kind of mobility area, do not hesitate to reach out to your trusted EY advisors who will direct you to our mobility experts.