Mobility budget and working at home: Unexpected good friends?

The Act of 17 March 2019 concerning the introduction of a mobility budget allows workers to make their mobility more environmentally friendly under a beneficial tax and social security regime; for instance by replacing a diesel company car with an electric car. While the cash for cars legislation, which was introduced in the same period, has in the meantime been declared unconstitutional by the Constitutional Court, the legislation on the mobility budget is still applicable. The question arises nevertheless how this legislation should be applied in the current conditions where employees work at home to the extent this is possible.

One can in the first place point out that the mobility budget is not subject to any condition linked to the number of kilometres travelled while commuting. If an employee did, for instance, use the mobility budget to replace a diesel company car with an electric car, nothing changes if this employee starts working at home, hence they only use that electric car for private travelling.

One of the possible uses of the mobility budget concerns relocation costs. The basic idea is that it would help to solve the mobility problems if people would relocate to somewhere near their place of work, rather than commuting long distances, hence it should be possible to use the mobility budget to pay rent or a mortgage for a home close to the place of work. To encourage this, the mobility budget is exempt of all social security contributions and taxes.

Although this was not the main objective of the mobility budget, the question arises how this situation should be applied if a worker continues living in the same house, but starts working from home. From an ecological point of view, this has the same result as a worker who moves to somewhere within walking distance of their place of work, as in both cases, there is no longer any commuting.

The notion of housing costs is in the Act of 17 March 2019 defined as “the rent and interests on a mortgage concerning a house located within a range of 5 kilometre of the normal place of work.” The notion “place of work” is not defined in the Act. According to the instructions of the tax administration, this should in the first place be assessed on the basis of the employment contract. The employer or the employee invoking the mobility budget, are nevertheless free to establish on the basis of all available evidence where the employee works most of the time.

As the legislation on the mobility budget does not include an exception for employees working at home, the tax administration clarified in its instructions that the mobility budget can also be used to pay rent or the interest on a mortgage if the employee works from home most of the time. This applies both in case of working from home on a structural basis, and working from home on a temporary basis in the framework of the COVID-19 crisis.

Obviously, this is only the case if all conditions stipulated in the legislation are fulfilled. The employee should renounce a company car which was made available or to which they were entitled during the required period. There is also the condition that the amount of the mobility budget is capped at the cost of the renounced company car.

When it comes to rent, the mobility budget can only be used for the actual rent, not for any charges for electricity, heating or the maintenance of the common part of an apartment. When it comes to mortgages, the mobility budget can only be used for the interests, hence not for the repayment of the capital. The maximum amount will thus decrease each month for mortgages with a fixed interest rate.

For employees living together, the mobility budget is only subject to the condition that the employee lives in the house concerned. The mobility budget can thus also be used if the house is owned by the partner of the employee involved. The mobility budget can even be used by both partners. It goes without saying that an amount paid as rent or interests, can only be used once to justify a mobility budget.