Mobility budget and TCO: what every employer needs to know

As more organisations in Belgium evaluate or introduce the mobility budget, one question keeps coming up. What does the mobility budget actually cost our company, and what value does it deliver?

Calculating the total cost of ownership (TCO) for a traditional company car is simple. Expenses are predictable and largely fixed. A mobility budget, on the other hand, spans multiple transport modes, providers, and tax rules. This comes with a lot of flexibility, but it also creates complexity when having to understand the real costs.

As such, understanding the TCO of the mobility budget in Belgium is essential before making strategic decisions. For instance, it allows you to design fair and balanced mobility policies while reducing the risk of overcompensating employees. A clear view of TCO also helps you compare the mobility budget with traditional company car plans. This ensures that employees receive fair benefits, regardless of the mobility option they choose.

Ultimately, understanding TCO supports better long-term planning and helps companies transition toward a future-ready mobility strategy. So, before you start calculating numbers, you must define what to include in the cost picture.

What is TCO in the context of mobility? #

Total cost of ownership (TCO) refers to the actual costs associated with providing mobility to an employee. It includes direct expenses, such as leasing or charging a car. However, it also covers the indirect costs related to managing and maintaining mobility solutions over time.

As such, TCO adds a new layer of complexity in the era of mobility budgets.

A typical company car carries a predictable monthly leasing cost. With the mobility budget, companies now need to track several smaller interactions. These include train subscriptions, bike leasing, payments for mobility apps, car sharing, and reimbursements. For each of them, there are different tax implications.

Breaking down the TCO of the mobility budget #

To build an accurate view of the TCO, companies need to consider all components: financial, operations, and fiscal.

1. Direct vehicle costs

While the mobility budget includes several cost aspects, cars remain part of the equation. For example, employees may choose a low- or zero-emission company car.

In such cases, direct car costs include leasing, fuel or electricity, insurance and maintenance, vehicle registration, and road taxes. These are the most visible and easiest to quantify, and often form the baseline for TCO calculations in Belgium.

2. Indirect and operational costs

Looking at the indirect costs, this is where most organisations underestimate their total cost. Indirect costs typically include:

• Administrative workload includes managing several providers, reimbursement flows, and approvals.
• Data collection and reporting on usage data across different mobility modes.
• Employee time spent logging expenses or managing various mobility apps.
• Policy management, including compliance checks and regular updates.

For companies that opt for more flexible mobility solutions, these costs can add up to a high percentage of the overall cost.

3. Mobility budget components

The mobility budget in Belgium rests on three pillars that determine which costs are acceptable and therefore influence TCO.

1. Eco-friendly company car: Employees can choose a low-emission or electric company car, replacing the traditional company car.
2. Sustainable mobility expenses: This category encompasses a range of tax-exempt sustainable commuting options, including public transportation, shared mobility, cycling, and car-sharing.
3. Payout option: If employees don't spend the full budget by the end of the year, they qualify for a cash payout. This payout is exempt from income tax but subject to social security contributions.

Each of these pillars comes with its own fiscal rules. That means the TCO will vary depending on how employees choose to spend their budget.

4. Tax and social security impacts

While all components influence TCO, taxation and social security rules play a defining role in the final cost. For company cars, employees are taxed on a benefit-in-kind. Employers, on the other hand, face non-deductible expenses such as leasing, insurance, and fuel. These expenses increase total employer costs and reduce employees' net benefit.

With the mobility budget, this changes. Many of its components are exempt from taxes and social contributions to some extent. This is especially true for costs associated with sustainable transportation. Some expenses are also VAT-deductible.

A well-structured mobility budget can provide the same value as a company car. It does this at a lower cost for the employer and offers a greater benefit for the employee. The system aims to be financially neutral. However, in practice, finding the right mix of sustainable options often makes it more cost-efficient overall.

5. A conceptual example

To make the TCO breakdown of the mobility budget more tangible, let's look at a simplified comparison.

Imagine a company that allocates €800 per month for a mid-range company car. Under the company car policy that budget would cover:

• Leasing and insurance: €650
• Energy (fuel or electric charging): €100
• Administration and indirect costs: €50

This comes at a total employer cost of about €800 with limited flexibility for the employee.

Now, looking at the mobility budget, this same amount could instead cover:

• A lease for a small electric vehicle (pillar 1) for €500
• A monthly train pass and shared car trips (pillar 2) for €200
• Around €100 left at the end of the year as a cash payout (pillar 3)

If employees use their mobility budget mainly for sustainable options, these are primarily exempt from tax and, in some instances, even VAT-deductible. Potentially, this reduces the employer's real costs to roughly €750, depending on the tax rules for each component.

Meanwhile, employees can enjoy much greater flexibility than under a car-only policy. It is worth remembering that the remaining budget converts into a cash payout and becomes subject to social contributions. The net value will be lower, and there's no fiscal advantage to gain.

This example clearly shows why tracking and optimising TCO is so essential. Companies can only understand the actual financial impact of their mobility budget by adding all costs across cars, mobility services, and tax rules.

Why understanding TCO comes before calculating it #

Before diving into formulas and spreadsheets, it's essential to clearly define what belongs in the total cost picture. Without that basis, TCO calculations can lead to misleading outcomes.

Understanding the TCO framework first ensures that you compare mobility options fairly, account for indirect and administrative effort, and recognise tax rules. It also supports more consistent decision-making and gives employees better control and predictability as mobility needs evolve. In short, clarity comes before calculations.

Once you've mapped all cost drivers discussed earlier, you can shift your focus toward modelling and scenario planning. This foundation is particularly valuable for employers in Belgium who want to introduce flexible mobility options without compromising financial control or transparency.

This article is part of a two-article series about the total cost of ownership for the mobility budget. In the following article, we will dive into the actual TCO calculations in Belgium, including formulas to help you calculate the TCO of mobility and benchmark your fleet strategy.