How do I calculate the Total Cost of Ownership (TCO) for the mobility budget?

The legal mobility budget in Belgium

Belgium’s legal or federal mobility budget offers employees the opportunity to exchange their company car for sustainable alternatives.

The alternatives are divided into 3 pillars:

• Pillar 1: environmentally friendly company car with a CO2 emission lower than 95 g/km
• Pillar 2: sustainable mobility and housing costs
• Pillar 3: payment of the remaining budget at the end of the year

Want to learn more about the mobility budget?

Calculation based on Total Cost of Ownership (TCO)

To calculate the mobility budget, you rely on the Total Cost of Ownership. This is the total annual gross cost of a company car.

To calculate the TCO, there are two official formulas: the actual cost formula and the lump sum value formula.

TCO Formula 1: Actual Cost formula

The first TCO formula includes the average annual gross cost of the company car. The cost is based on the incurred financial expenses, added to the costs mentioned in your car policy.

This average is calculated based on the costs incurred in the last 4 years. If your employee has not been driving the company car for 4 years yet, you apply the actual duration of use of the company car.

To calculate the sum of the actual costs of the car, you rely on a comprehensive list of expenses. You add only the costs mentioned in this list.

These costs are:

• The lease or rental price of the car
• Fuel and electricity costs
• Insurance
• Employer’s CO2 solidarity contribution to the NSSO
• Annual depreciation of 20% of the cost price of the environmentally friendly company car, taking into account invoiced options and accessories and allowed discounts
• Interest on borrowed capital
• Administration costs for fuel and charging cards
• Annual amortisation of 20% of the installation costs of the charge point and related costs, including conservation and repair costs
• Charging point and cable management costs
• Toll, carwash, garage and parking fees
• Cost of a replacement car
• Cost of preparing the car and cost of replacing, changing and storing tyres
• Expert assessment costs when returning the car at the end of the contract or in case of change of driver
• Repair costs recorded when the vehicle is returned at the end of the contract
• Costs for technical inspections
• Service management costs
• Invoice tax and road tax
• Non-recoverable VAT on the above costs
• Tax on the non-deductible part of the above costs
• Tax on the part of the benefit in kind that constitutes a disallowed expense.

TCO Formula 2: Lump Sum Value Formula

In the second TCO formula, the specific calculation depends on the type of vehicle. You make a distinction between:

• Hired or leased vehicles
• Owned or financially leased vehicles

For both formulas, you add a fixed and variable component.

For a hired or leased vehicle, the formula consists of:

• Fixed component: Annual rental or lease cost + average annual cost of all expenses not included in the rental or lease contract (unless included in car policy) + non-deductible VAT + tax on non-deductible car expenses + CO2 solidarity contribution paid by the employer
• Variable component: (6,000 + commuting distance x 2 x 200) x fuel consumption cost per kilometer, provided that fuel costs are not included in the annual rental or lease cost

For an owned or financially leased vehicle, the formula looks like this:

• Fixed component: Catalog value of the vehicle (including tax on the non-deductible portion of the catalog value) x 25% + CO2 solidarity contribution paid by the employer
• Variable component: (6,000 + commuting distance x 2 x 200) x fuel consumption cost per kilometer

If you opt for the lump-sum value formula, you must state this explicitly. Even if you decide or continue to use it after three years, you should mention this in your car and mobility budget policy.

Keep these three things in mind

1. A digital mobility account for the entire mobility budget

In addition, your employees should also have access to a digital mobility account where they can track their entire mobility budget at all times.

Fortunately, the Olympus app knows how to do that.

2. Not using a lump sum value formula? Then the actual cost formula is mandatory

If you do not explicitly indicate that you are using the lump sum value formula for calculating the TCO, then you are required to use the actual cost formula.

If you wish to switch formulas, you can do so after three years. You will then use the new formula for every new employee who trades in their company car for the mobility budget.

3. Mileage allowance for business trips

As an employer, you can choose whether or not to include the mileage allowance for business trips in the TCO.

• If you include it, your employee will no longer be entitled to an additional exempted mileage allowance.
• If you don’t include it, your employee will receive an exempted mileage allowance as compensation.

Ready for the mobility policy of the future?

Source: Royal Decree of September 10, 2023, implementing articles 8, §5, and 12, §5, of the law of March 17, 2019, on the introduction of a mobility budget and amending the royal decree of March 21, 2019 implementing the law of March 17th, 2019 on the introduction of a mobility budget. Belgian Official Gazette September 29th, 2023.