RSM Belgium


Tax Insights January 2020 - Mobility allowance or ‘cash for car’ annulled by the Constitutional Court

On January 23rd, 2020, the Constitutional Court of Belgium annulled the legislation dd. March 30th, 2018 concerning the mobility allowance or so-called ‘cash for car’. This law entered into force on January 1st, 2018 and provides the possibility to an employee to return his company car in exchange for a cash mobility allowance. Similar to the advantageous social security and tax treatment of the company car in Belgium, this mobility allowance is treated beneficially from both a social security and tax point of view.

Mobility allowance discriminatory

The Belgian legislator’s aim in introducing the mobility allowance system was to help reduce the burden of car traffic resulting, inter alia, from the social security and tax advantages granted to employers and employees using the company car scheme in Belgium. A positive impact was therefore expected in terms of mobility and climate change.

Although more sustainability is likely to be achieved in several cases, the Constitutional Court notes that there is no guarantee that the mobility allowance always will be used for more sustainable means of transport in all situations. After all, under the mobility allowance scheme it is not compulsory to use the benefit obtained in cash in exchange for the company car for more sustainable alternative means of transport. Consequently, the system of the cash for car is not suitable to achieve the objective pursued by the Belgian legislator.

Additionally, employees who return their company car receive a monetary benefit that is treated considerably more advantageous from a social security and tax perspective than ordinary wages. As a result, employees who benefit from the cash for car and those who do not have the right to a company car are in fact in the same situation but are treated differently anyway. On the other hand, providing a company car to an employee differs substantially from granting a cash benefit. According to the Constitutional Court, it can therefore not be objectively and reasonably justified to grant a social security and tax advantage to employers and employees who use the mobility allowance system.


The Constitutional Court annuls the mobility allowance or so-called ‘cash for car’ system but maintains the consequences of the annulled provisions until, if that would be the case, new legal provisions regarding the mobility allowance enter into force and no later than December 31st, 2020. This way the Court provides the Belgian legislator the opportunity to implement new regulations in this regard.


In anticipation of new legal provisions on the mobility allowance, employers could already start looking at alternatives. In this context, one could opt for a company car again. Also, the regulations regarding the mobility budget are still in force. If the employer chooses to offer this possibility to employees, the employee could hand in his company car in exchange for a budget that can be freely spent on (more) sustainable mobility. Contrary to the rules relating to the mobility allowance as annulled by the Belgian Constitutional Court, the employee is bound, within the framework of the mobility budget, to spend the budget that is made available to him in exchange for his company car, on more sustainable alternatives such as a green company car, public transportation or a bicycle.

RSM Belgium is in any case ready to answer any queries you might have about the consequences of the annulation of the mobility allowance system, to advise on how to deal with the implications and to provide guidance in seeking good alternatives. 

In case you would like to receive more information with respect to the above, or any other assistance, the RSM Belgium Tax team is at your disposal ([email protected]).

Download our Tax Insight


How can we help you?

Contact us by phone +32 (0)2 379 34 70 or submit your questions, comments, or proposal requests.

Email us