Mobility budget - how the concept works
7. Mar 2023 | By Malena Gärtner
Mobility budgets are an efficient alternative to the company car model. They offer employees the opportunity to forego the company car and instead flexibly use alternative means of transport. This helps save costs and taxes, while at the same time promoting individuality, social aspects and environmental protection. We have compiled the most important aspects of the mobility budget instead of company car concept for you here.
The functioning of mobility budget concepts
The company car has long been a prestige object for many employees, but has lost some of its attractiveness in recent years. Many employees want unconventional solutions and would like to use different transport options flexibly for their own mobility. Many German companies have now reacted to these changed ideas and introduced mobility budgets. The basic idea of this concept is that employees voluntarily do without a company car and cover business and private trips with different means of transport within the agreed budget framework. Other European countries offer orientation, since mobility concepts are already standard in Belgium, Luxembourg, France and Spain. A mobility budget offers a high degree of design freedom, since different modes of transport can be included in the service portfolio and the employees use public transport offers such as car sharing, rental cars, bicycles, scooters, carpooling or taxi rides. The rules for claiming the mobility allowance can be individually adjusted so that criteria such as age, degree of employment, career level or place of residence are included in the concept.
The advantages of mobility budgets for companies
Budget solutions are very popular in companies, as they help to save costs in fleet management. Downsizing the fleet reduces expenditure on acquisition, maintenance and administration, and at the same time freed-up space can be used for other purposes. A company car incurs high monthly costs in the company and for the employee, whereas with a mobility budget, taxation is more attractive and the same amount can be divided flexibly between different modes of transport. Completely dispensing with company cars is usually impossible, however, as employees in the field in particular often rely on them. They use the car every day over long distances, so in this case it is financially worthwhile to use it efficiently without long periods of idleness. By contrast, business travelers who only use a laptop and can therefore use the train to work belong to the ideal target group for mobility concepts.
The benefits of employee mobility budgets
The mobility budget for employees is freely available in the amount set and thus offers a high degree of flexibility. It can be used for trips between the workplace and home, but also for travel. Employees decide for themselves whether to use it for a company bicycle or a railcard, and spontaneous decisions for public transport, a rental vehicle or a cab ride are also possible. This form of mobility offers greater efficiency compared to the inflexible company car variant, while at the same time taking into account the pursuit of individuality and freedom.
The monthly budget can also be saved or converted. Non-operating use is possible and can be used, for example, for pension subsidies, a new smartphone or your own e-bike. It is also possible to finance additional vacation days or a place at a daycare center. In addition, the mobility budget helps to save taxes and, as a complete package, is popular with young talent, experienced professionals and families alike.
Environmental protection and social cohesion
Most employees today expect their employer to actively address environmental protection issues. The concept of a mobility budget instead of a company car is a suitable instrument for this purpose, as employees can individually opt for ecological alternatives such as buses, trains, e-scooters or e-bikes, and the company is given the opportunity to do justice to the idea of environmental protection by reducing the size of the fleet, saving space and increasing efficiency. The solution approach of a mobility budget instead of a company car additionally benefits all employees, as in contrast to the company car model, the mobility budget also benefits groups of people who have not been considered so far.
The fiscal aspects of the mobility budget
In contrast to a company car, flexible mobility allowances are not considered as salary conversion for tax purposes and therefore offer attractive savings potential. It is possible that the mobility budget will not be taxed at all for the employee if the company provides the e-bike, car-sharing vehicle or e-scooter. There is a similar regulation for the frequently used job ticket, which is always tax-free if it is provided in addition to the salary. If employer and employee share equally in the costs, at least 15% income tax must be paid. The same applies to the provision of an e-bike, but it should be noted that according to § 37 EStG all wage contributions of less than 10,000 euros must be taxed at a flat rate of 30%. As part of the mobility allowance, there is also the option of using your own car and deducting 30 cents per kilometer in your tax return for a maximum of 180 working days. The mobility budget tax is 15%, but the commute to work can no longer be deducted as income-related expenses. A mobility card provided by the company is therefore a perfect solution for mobility budget taxation, since the costs incurred during use are then treated as benefits in kind. This offers advantages for companies and employees, as lower taxes are incurred compared to salary payments.
For many companies, the introduction of a mobility budget is a sustainable solution that saves costs in fleet management and at the same time meets the needs and expectations of employees. Although the method cannot completely replace the company car, in most cases the advantages of not using a company vehicle outweigh the disadvantages. The model is convincing due to its high flexibility, as various mobility alternatives can be used in an uncomplicated manner and the mobility lump sum can also be used for private or other purposes. Companies and employees can save taxes with the mobility budget, and environmental protection aspects also increase its attractiveness.