How to apply the TCO formulas for the mobility budget in Belgium

For HR, finance, and fleet professionals, this step is where the real value lies. Understanding the formulas is one thing, but applying them correctly will make the difference. Using the two formulas allows you to compare mobility options. This includes assessing company car alternatives and ensuring your mobility budget remains financially predictable.

As outlined in previous articles, the mobility budget spreads spending across different areas, tax rules, and mobility providers. It makes calculating the TCO more complex than with a regular company car.

Adopting a structured approach reduces guesswork and helps you build a reliable TCO calculation method. In this article, we break down, step by step, how to use the formulas and conclude with a scenario from a Belgian context.

Step 1: Identify the employee’s allocated mobility budget #

Every TCO calculation begins with the amount you assign to the employee. For instance, €7,200 per year translates to €600 per month. This figure serves as the base for mapping all mobility spending. And it's this value that becomes the starting point for Formula 2.

Formula 2 is the one designed specifically to calculate the real employer cost of the mobility budget.

Step 2: Map all mobility costs the employee generates #

Once you know the allocated amount, the next step is to understand how the employee actually spends it. This means capturing all costs across the three pillars of the mobility budget framework:

• Pillar 1: low- or zero-emission company car
• Pillar 2: sustainable mobility (public transport, cycling, shared mobility, etc.)
• Pillar 3: year-end payout of unused mobility budget

Each pillar comes with different fiscal rules. Therefore, it's critical to accurately categorise costs for a correct TCO calculation.

Step 3: Apply tax and VAT deduction rules #

After mapping costs, you must apply tax and VAT rules to each item. This step defines the financial outcome more than any other. This is especially true for TCO calculations in Belgium.

Many pillar-2 expenses are fully tax-exempt and sometimes partially VAT-deductible. Pillar-1 electric vehicles benefit from favourable tax reduction rules. And the unused amount paid out under pillar 3 is subject to employer social contributions.

Treating each category correctly determines if the mobility budget becomes more cost-efficient than a traditional company car.

Step 4: Add the indirect and operational costs #

Often, companies underestimate the indirect costs. However, these are essential for a realistic total cost of ownership calculation for mobility.

Think about all the variables: Administrative work, reimbursement processing, reporting effort, and mobility management tools. All of these influence the employer's final costs. For many organisations, such costs will increase when employees use several mobility modes rather than a single company car.

Including these elements makes your comparison between mobility budgets and company car alternatives much more accurate.

Step 5: Calculate the employer’s actual cost using Formula 2 #

Formula 2 is where everything comes together. Use the allocated budget, the fiscal advantages, VAT recovery, and indirect costs. Using these items for the calculation helps you determine what the mobility budget actually costs the employer.

Often, this calculation shows that employees who rely heavily on sustainable mobility choices generate lower employer costs. This is mainly thanks to tax exemptions and improved deductibility rates.

Step 6: Calculate the similar company car TCO using Formula 1 #

To understand whether the mobility budget is cost-neutral or saves you money, calculate the TCO of the alternative. In this case, usually a classic company car.

Using Formula 1, you collect the direct costs (lease, fuel, charging, insurance) and add the indirect costs. On top, apply fiscal impact such as benefit-in-kind and deductibility. This gives you the baseline used by fleet management teams in Belgium when evaluating mobility options.

Step 7: Compare the outcomes to support decisions #

With both formulas calculated, you can now compare the mobility budget with a similar company car. Comparing the results of the two formulas will help you answer:

• Is the mobility budget cheaper or more expensive than a car?
• Where do tax benefits create the most significant cost savings?
• Does indirect cost increase or decrease with flexible mobility options?
• Are employees using their budget efficiently?

Getting answers to these questions supports strategic decisions on mobility policy design, job-category budgets, and long-term fleet planning.

Example: Applying both formulas to one employee profile #

To illustrate the method, let’s look at a typical Belgian employee scenario. The allocated mobility budget is €600 per month, corresponding to €7,200 per year.

In this scenario, the employee uses the budgets as follows:

• €4,800 for an electric vehicle (pillar 1)
• €1,800 for public transport and shared mobility (pillar 2)
• €600 unused budget paid out under (pillar 3)

Using Formula 2 (actual employer cost) #

TCO mobility budget = allocated budgets - fiscal advantages + operational costs + social contributions on cash payout

Using Formula 2, we get to the following:

• Allocated budget: €7,200
• Fiscal advantages (tax-exempt pillar 2 spending + limited VAT recovery): –€300
• Indirect cost and operational costs: +€200
• Social contribution on payout: +€150

In this case, the employer TCO results in around €7,250

Using Formula 1 (company car comparison) #

TCO = direct costs + indirect costs + fiscal impact

A comparable EV or mid-range car typically generates:

• Direct costs: €7,800
• Indirect costs: €250
• Fiscal impact (non-deductible items, BIK, CO₂ contributions): €400

Using Formula 1, we arrive at an approximate employer TCO of €8,450

Result #

In this scenario, the mobility budget is more than €1,200 cheaper than a company car. The main reasons are tax exemptions and the favourable treatment of sustainable mobility.

Conclusion: From calculation to actionable mobility strategy #

Applying the TCO formulas is not just about crunching numbers. It gives you a sharper and more precise picture of how employees use mobility. Obtain insights into how tax and VAT incentives influence costs, and how different mobility options compare in practice.

By following this clear sequence to calculate TCO, employers can build mobility budgets that are fair, cost-efficient, and align with long-term sustainability goals. When combining both formulas, you ensure accurate comparisons and better financial planning.

A platform like Muto helps you automate TCO calculations so you can avoid manual mathematics. It also monitors TCO to design mobility strategies that deliver the most value to companies and employees.