How do I calculate the Total Cost of Ownership (TCO) for the mobility budget?
How do you calculate the mobility budget? What official formulas are there to determine the TCO?
Read the short summary here.
The legal mobility budget
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 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
To calculate the mobility budget, you rely on the Total Cost of Ownership (TCO). This is the total annual gross cost of a company car.
To calculate the TCO, there are two official formulas since September 2023: the actual cost formula and the lump sum value formula.
Starting from January 1, 2024, as an employer, you are obliged to use one of these formulas. For a period of three years, you use the same formula for all employees who exchange their company car for the mobility budget.
Next, you choose whether to use this formula for each individual employee or per job category.
TCO Formula 1: Actual Cost formula
The first TCO formula includes the average annual gross cost of the company car.
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. These include:
- The lease or rental price of the car
- Fuel and electricity costs
- Insurance
- CO2 solidarity contribution
- Non-deductible VAT
- Tax on non-deductible expenses
- …
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 choose this option and use it again after three years, you must explicitly indicate your decision.
Don’t know where to start? No worries. Our mobility advisors are happy to assist you.
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.
