The mobility budget is one of the trends that will change mobility in 2024. More and more people are looking for flexible and sustainable mobility options, especially for commuting to work, where mobility behaviour has changed significantly due to hybrid working and flexible working models. Companies can respond specifically to this change in behaviour with a mobility budget for employees and also offer their employees an attractive benefit. But what does a mobility budget look like in reality and how does it work?
Mobility budget for employees
As a mobility budget, employees receive a monthly budget from their employer that allows them to freely choose the means of transport for their business or private journeys, such as bus, train, e-bike, taxi or even car sharing.
"The mobility budget for employees offers flexible access to all modes of transport. However, taxation is still regulated differently depending on the mode of transport. For example, tickets for public transport are generally tax-free, while other mobility services such as car sharing, Uber and taxis are taxed. The decisive factor here is how the mobility budget is offered and billed by the employer, how high the monthly amount is and whether the budget is granted instead of the salary or in addition."
Alternative to the company car
In companies with company cars, mobility budgets are intended to incentivise employees to do without a personal company car and make their own mobility more flexible. In fact, the company car has had its day as a status symbol. According to a representative study by the digital association Bitkom, the mobility behaviour of people in Germany has changed fundamentally in recent years: 96% state that they now travel differently, with a particular focus on sharing services and resource-saving mobility alternatives. In addition, the mobility profiles of employees vary greatly depending on their place of residence, age and living situation.
Accordingly, more and more employees are favouring a mobility budget instead of a company car, which allows them a more sustainable, flexible and individual form of transport.
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The easiest way to introduce a mobility budget in a company is via a comprehensive mobility platform or a software solution. A large number of mobility budget providers have now developed corresponding solutions. Platforms, such as NAVIT, bundle access to all mobility offers and help companies to save administrative effort, time and costs. Fully automated integration into the company's own HR, payroll and tax systems saves companies administrative effort, time and money. Employees, on the other hand, always have the choice of how they want to get to their destination: with shared mobility, public transport, rented bikes or cars or with petrol or charging cards for their own car.
Companies provide their teams with a monthly amount that they can use flexibly via an app instead of having to pay in advance and laboriously submit the costs for car subscriptions, public transport or refuelling individually. Providers such as NAVIT also automatically offset the resulting carbon footprint for companies via certified climate protection projects.
Integration of the Deutschlandticket (€49 ticket), which is popular with companies, also enables simple, fast and discounted access to the ticket, which companies can offer their employees. The provider takes care of applying for the Deutschlandticket from the transport association and making it available to employees in the app and automatically books the monthly payment via the individually allocated mobility budget. Employees benefit from significantly more favourable conditions: If the employer covers at least 25 per cent of the ticket, the ticket price is reduced by a further five per cent.
A mobility budget for employees works as follows:
The mobility budget is already being used by a wide range of companies, from start-ups to medium-sized companies and corporations. Each of these segments has unique mobility needs and the platform should be designed to cater for all of them. Start-ups, for example, usually have a smaller employee base and favour sharing mobility options or public transport.
Medium-sized companies, on the other hand, have a larger employee base and more complex mobility requirements. Employees often live outside of metropolises and have to travel longer distances, meaning they are dependent on other means of transport, such as their own vehicle. At its best, the platform is designed to handle the complexity of corporate mobility for any size of organisation.
For example, the software group SAP was one of the first German companies to introduce a mobility budget as a replacement for company cars from April 2023. This can be used to pay not only for rail travel, hire cars or e-scooters, but also for bicycle repairs.
At Deutsche Telekom, a Mobility-as-a-Service platform bundles the various modes of transport, making it easier to switch to public and shared forms of mobility. Instead of a company car, employees are offered a variety of alternatives: They can decide for themselves whether to use an e-company car or a BahnCard, or pay the budget into their personal working time account to take a sabbatical, for example. Deutsche Telekom also already operates its own corporate car-sharing fleet and various micro-mobility services.
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Providers of such flexible mobility solutions have also discovered the increased interest in mobility budgets. This means that more providers are now entering the market, promising to relieve companies of the administrative burden and offer them a simple solution for company employee benefits and mobility offers.
What needs to be considered when taxing the mobility budget?
Employees can benefit financially from a mobility budget. To ensure that employees enjoy the best possible financial benefit from a mobility budget, HR and finance managers should be familiar with and scrutinise the legal and tax requirements. It is advisable to consult internal or external tax experts.
While there is the so-called company car privilege when using a company car in Germany, the taxation of mobility budgets is somewhat more complex due to the current lack of standardised tax regulations. Employees pay tax on the non-cash benefit of private use of the company car either using the 1 per cent rule or via logbook documentation.
The mobility budget can in turn be taxed in different ways. Whether and how employees have to pay tax on it depends, among other things, on the means of transport used. For public transport journeys, it is generally tax-free, but if it is spent on other private journeys such as car sharing, it is taxed.
In most cases, mobility budgets are paid in addition to salary and, unlike company cars, are therefore not regarded as deferred compensation for tax purposes, which offers attractive savings potential. In the case of a mobility budget, for example, it is possible for employees not to pay tax at all if an e-bike, car-sharing vehicle or e-scooter is provided by the company. There is a similar regulation for the frequently used job ticket or the popular Germany ticket, which is tax-free if it is issued in addition to the salary.
The ideal solution for mobility budget taxation is a mobility card provided by the company, as the mobility costs are then treated as benefits in kind. This offers advantages for companies and employees, as lower taxes are incurred compared to salary payments.
From 2024, companies in the EU with more than 250 employees will be obliged to report all emissions caused by their business mobility. The background to this is a new EU directive, the Corporate Sustainability Reporting Directive (CSRD). One of the aims of this directive is to create more transparency in order to obtain reliable and comparable information on the sustainability of companies. As a result of the CSRD, almost 50,000 companies instead of the previous 11,000 will have to report comprehensively on how their company is affected by climate change, for example, and above all what impact their business activities have on people and the environment.
Specifically, this mainly concerns commuter mobility, business travel and the company's own vehicle fleet. However, many companies lack sufficient data to fulfil the quality standards of the CSRD, particularly in the area of commuter mobility. If the company does not have its own data, average statistical values are assumed, which in turn are based on a high proportion of fuel-powered vehicles. The resulting key figures mean a high CO₂ levy price, which results in financial disadvantages for the company. A mobility budget platform can help companies to collect suitable mobility data and optimise their carbon footprint by promoting sustainable forms of mobility.
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