The company car will be significantly more expensive for tax purposes in the coming years. Companies that want to avoid this will have to green up their fleet completely. Not an easy exercise, because such a greening project has an impact on many areas within the company. Depending on the complexity, some organisations may consider banning all company cars. But that is simply not possible.
Ban all company cars? You can’t just do that. After all, the private use of the company car is regarded as pay. In essence, employers who grant their employees (wage) benefits cannot change them unilaterally. In other words, if the employer chooses to no longer grant company cars (which may be used privately), this must be done in mutual agreement with the employees. Whether or not in combination with some form of compensation.
If the employer does not do so, the employees can state that the employer has changed the employment conditions to such an extent that the employment contract was terminated (the so-called “implicit dismissal”). In that case, the employee can claim compensation in lieu of notice, plus compensation for the period for which he or she no longer benefited from a company car.
Changes to the car policy, employment regulations and/or employment contracts?
Anyone opting for a greener fleet must take into account the labour law consequences. The way in which the transition must take place varies depending on the company.
- Do the employment regulations make arrangements for company cars? Then the regulations must be adapted in accordance with standards of good practice.
- Is there a mobility or company car policy? Then it goes without saying that you also have to make adjustments and inform the employees.
- Do the employment contracts contain explicit agreements on company cars as a salary benefit or is reference made to the company car policy? Then it is advisable to add an annex to the agreement.
What are the risks?
Again, if the company car may be used privately, it forms part of the salary. Therefore, always be careful that changes (in the context of the greening of the vehicle fleet) do not lead to a (unilateral) adjustment of that salary. Case law tends to consider a change in salary by the employer as unacceptable (even in the case of small differences in the amounts).
Can you change the make and model of a company car unilaterally? For example, can you replace an employee’s petrol-powered BMW X5 with a (possibly smaller) electric car? As an employer, you have the right to make changes to a certain extent or “ius variandi”, which means that you can change the employment conditions within certain limits. This right enables the employer to adapt the work organisation to the economic situation or the needs of the company.
As an employer, you can rely on this principle as an argument that certain concessions and flexibility can also be expected from the employees’ side. Certainly within the necessary greening of the vehicle fleet (from a tax perspective as well as in the context of the global fight against CO2 emissions and climate change). After all, adjustments to the types of company cars offered are inherent to such policy changes and must therefore also be accepted by employees.
Nevertheless, adjustments remain a matter on which the courts will decide in the event of a dispute. Suppose that there would still be a significant unilateral change in salary (which exceeds the limits of the employer’s right to change), then the employee can possibly invoke “implicit dismissal” and claim compensation in lieu of notice.
Implement a mobility budget?
As an employer, you can opt to implement a mobility budget in the company.
To make the mobility budget more attractive, the possibilities have been significantly expanded since 1 January 2022. The legislator wants to stop the high number of (polluting) company cars.
You can offer a mobility budget - instead of a company car - to employees who have or are entitled to a company car. The annual amount is a minimum of 3,000 EUR and a maximum of 1/5 of the total annual gross salary, with an absolute maximum of 16,000 EUR.
The employer determines the offer for the mobility budget in its company. The employee, in turn, chooses which pillars he or she spends the allocated budget on:
Pillar 1 - A more environmentally friendly company car
The employee can still opt for a company car, albeit an environmentally friendly car with a maximum CO2 emission of 95 g/km. As of 1 January 2026, only fully electric vehicles will be considered environmentally friendly.
Pillar 2 - Sustainable mobility with alternative means of transport
The employer is obliged to make at least one offer in pillar 2. Incidentally, this pillar is undoubtedly the most favourable for the employee, since no social security and withholding tax has to be paid on the offer.
The employee can use his or her mobility budget to finance so-called “soft mobility”. These are the costs for the purchase/lease of a (possibly electric) bicycle/scooter, a moped (up to 45 km/h), the parking costs, a “hoverboard”, the purchase of non-mandatory safety equipment, bicycle helmets and fluorescent vests, as well as season tickets/tickets for public transport (also for cohabiting family members) and partial solutions, etc.
The financing of housing in pillar 2 is particularly interesting. Living close to work is a sustainable mobility solution par excellence. Anyone who lives within a radius of 10 km from the normal place of employment or who teleworks 60% of the time can also finance rental income or the mortgage loan (capital and interest) with his or her mobility budget.
Pillar 3 - The remaining balance is paid out in cash
This amount is fully exempt from tax, but is subject to a special employee contribution of 38.07%. In exchange for this contribution, the balance is included in the calculation basis for the sickness and unemployment benefit and for the pension.
Do you have any questions about choosing the best options for your fleet? Are you looking for help with the analysis of your situation? We help you to list all the advantages and disadvantages.