Mobility Budget taxation in Germany 2023 explained

In a nutshell:

• Basics. The mobility budget is an allowance companies offer their employees to give them access to all means of transport.
  
  The taxation of the mobility budget varies depending on the mode of transportation the employees use.
  
  For one, the amount of the granted budget and whether it is granted as an additional salary raise, or provided as a beneficial addition, influences the taxation.
  
  Additionally, public transport tickets are tax-exempt, while other mobility services such as Uber and taxis are taxed.
  
  
• Salary supplement instead of salary conversion. Salary conversions from cash wages to wages in kind are generally subject to tax and social security contributions. It is therefore worthwhile to grant a mobility budget as a benefit in addition to the contractually agreed salary.
  
  
• Non-cash benefit. The mobility budget can be accounted for as a benefit in kind or non-cash benefit ('Sachbezug').
  
  There is a tax exemption allowed up to an amount of €50. Above this amount, a standard flat-rate tax of 30% is borne by the company and can be settled in accordance with section 37 b of the German Income Tax Act (EStG).
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• Higher attractiveness with tax rebates. At first, the taxation of the mobility budget seems complex. Yet, it is worthwhile for companies to take a closer look. Partial tax exemptions and an applicable flat tax rate make the benefit more attractive.
  
  

From an accounting perspective, the mobility budget is  a very attractive benefit

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Companies want to provide their employees with a flexible and climate-friendly mobility offering, in order to meet the changing needs and wishes of their employees.

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In addition to a regular job ticket, where the company provides the employee with a monthly public transport pass,  solutions also include company bikes, car sharing, or a mobility budget.

Assembling an offering seems to be very daunting. Often enough, the topic of mobility benefits ends up with a request for more info on taxes and payroll accounting.
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This is an important topic for both companies and employees, and it also determines how attractive the rollout of a mobility budget is for companies.

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At first glance, the taxation of the mobility budget appears to be quite complex. Thus, we clarify what you need to consider when it comes to taxation. What is actually taxed and what is tax-free?

When companies provide a mobility budget to their employees for business and private use it is a non-cash benefit ('Sachbezug'). Hence, as a taxable wage component subject to social security contributions.

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Yet, legislators have recognized the benefits of sustainable transport modes and have exempted some of these forms of mobility from tax altogether. For others, a flat-rate tax paid by the employer compensates employees.

Here is a brief overview of how individual means of transport are taxed:

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• Trips by public transport are tax-free. The travel costs of environmentally friendly means of transport, such as bus and train, are subsidized by the state.
  
  This turns out not only cheaper than a company car but encourages employees to travel to work using climate-friendly transportation.
  
  The advantage for companies is that they can offer their employees additional benefits and at the same time promote sustainable mobility. You can read more about how public transport tickets are paid for below.
  
  
• Company bikes can be provided tax-free or receive tax benefits through bike leasing plans. You can find out how this works in this article on bike leasing.
  
  
• Credit used for car sharing or ride-hailing service providers is tax-free up to an amount of €50 per month. Beyond that, these non-cash benefits are subject to a 30% flat-rate payroll tax (plus social security contributions and any solidarity surcharges and church tax).

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Claim your taxes with mobility budget. How it works:

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When using the NAVIT mobility benefit solution, companies issue the mobility budget to their employees in the form of a limited virtual debit card.

This constitutes a non-cash benefit. Employees can use the available credit on the card as they wish for their daily mobility.

The budget is available at the end of the month, can be carried over to the following month, or expires.

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Because of the wide range of options offered by the mobility budget, employees can choose between bus, train, e-bike, car sharing, or cab on their way to work or home. Taxing these different forms of mobility initially appears complicated. 

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However, in order to simplify taxation, a uniform flat tax rate of 30% can be settled here (in accordance with section 37 b of the German Income Tax Act), since the mobility budget and its inclusive services are company benefits that are provided in addition to the agreed salary and do not exceed €10,000 per year.

Up to an amount of €50 per month, the mobility budget is even completely tax-exempt.

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Verdict: The mobility budget proves to be attractive as an employee benefit thanks to the tax exemption and a moderate flat tax rate. A non-cash benefit clause makes that happen.

What is the benefit in kind?

• A benefit in kind that is paid out in the form of an employee benefit in addition to the salary. 
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• A wide variety of services and products can be offered to employees as employee benefits in kind.

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What do I need to know about benefits in kind?

• The benefit in kind is paid in addition to the salary. A salary conversion is therefore not possible. The benefit may also not be paid out in cash or subsequently reimbursed.
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• The benefit in kind is tax-free up to a value of exactly (!) € 50. If the amount of the benefit exceeds this value, the entire amount is taxable.
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• The benefit in kind is always shown in the salary statement, regardless of the amount of the benefit in kind.

For companies, a "taxation of benefits in kind" means a significantly lower overall taxation. For employees, too, the use of a benefit in kind has a tax advantage over a salary payment. 

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Information and content disclaimer

NAVIT hereby states that the information provided about benefits on our website is only for informational purposes only and does not represent any tax or legal advice. The content is not intended to replace any individual, binding tax and legal advice that addresses your specific tax  or legal situation. We, therefore, declare that information provided is without guarantee of correctness and completeness. 

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We continue to provide updated information and research insights. We as a provider of this information cannot assume any liability for the accuracy, completeness, and timeliness of the information provided. In particular, the information is of a general nature and does not constitute tax or legal advice in individual cases. For questions about taxes and legal topics, please consult a certified tax advisor or lawyer.

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