Mobility budget: is it being used to the best effect?

The mobility budget is becoming increasingly popular, especially amongst younger employees in urban areas. As an avid supporter of multimodal transportation, Arval can only applaud this, but we do think it is worth taking a closer look at how this mobility budget is in practice actually being spent.

The federal mobility budget is a tax-efficient scheme that allows employees who are entitled to a company car to choose a cheaper model, or not use a company car at all in exchange for alternative transport solutions or cash. Moreover, it is fully budget-neutral for the employer. Specifically, the mobility budget allows these employees to spend the budget that would otherwise go to a company car on three pillars:

1. A car is still an option, but they have the option to opt for a cheaper model and spend the rest of the budget on the other two pillars.
2. Alternative transport solutions such as shared cars, bike leasing, public transport, taxis, etc. but also housing costs such as rent and mortgage repayments if the employee lives within a 10-kilometre radius from work or is allowed to work from home for more than 50% of the time.
3. Cash.

The mobility budget is on the rise…

The scheme was introduced in March 2019 and went virtually unnoticed for a long time. However, this has changed over the past year, when the overall figures doubled. With some employers, up to 20% of employees are now opting for the mobility budget.

Above all it is attracting younger employees and highly qualified people. It is particularly popular in companies located in city centres and/or near mobility hubs, which naturally makes sense.

...however, it is mainly being spent on housing costs

The recent success of the mobility budget is largely thanks to the easing of the distance rule on housing costs. Initially, employees were eligible only if they lived five kilometres or less from work. Now anyone who is allowed to work from home at least 50% of the time or lives up to 10 kilometres from work can spend their mobility budget on (some of) their housing costs.

If we look at how the mobility budget was spent last year, it appears that most of it went towards housing costs. According to our figures, around 80% of employees are spending their mobility budget on housing costs, compared to around 50% in 2022 and 40% in 2021. The easing of the distance rule therefore seems to have made an important difference.

What about multimodal transportation?

Promoting multimodal transportation – which was one of the legislator's main starting points for introducing the mobility budget – therefore remains a major challenge. However, there are now more than enough alternative means of transport and options we can use the mobility budget for.

Electric cars are becoming more and more affordable. People increasingly ride bicycles, scooters and cars, thus bicycle and scooter sharing services are on the rise, public transport is available, and so on. In addition there are also bicycle leasing options and easy online tools, so all the ingredients are there for employees to achieve a sustainable mobility mix and for employers to keep their admin as simple as possible.

A mobility budget for everyone

Moreover, can we still justify that only people who are entitled to a company car are also entitled to a mobility budget? For employers, the mobility budget remains an interesting, completely budget-neutral and sustainable solution that can be an important tool for attracting young employees in the war for talent.

By making this budget accessible to everyone, we are undoubtedly taking major steps towards even more sustainable mobility in the future – a future that Arval is only too happy to help realise. If you have any questions about how we can implement this further in your company, please do not hesitate to contact us.