Mobility Budget Instead of Company Car: Flexible Mobility for Employees

Mitarbeiter im urbanen Raum nutzen Bike- und Scooter-Sharing-Angebot dank einem Mobilitätsbudget

The mobility budget promises flexible mobility in the vehicle fleet. According to the Arval Mobility Observatory 2023, 21 percent of German companies already use a mobility budget. In times of remote or hybrid working and the need for more climate protection, it can be particularly worthwhile for companies to make their corporate mobility as flexible and sustainable as possible with the help of such a concept. Can the mobility budget become the key to more flexibility in the fleet? In this post, you’ll learn what a mobility budget is and the benefits it offers.

What is a mobility budget?

The mobility budget for employees is an alternative to the company car. The employer provides a predetermined budget that can be used flexibly for the use of various means of transportation. The mobility budget can then be divided up as desired over the month for business and private journeys between different modes of transport such as public transport, Deutsche Bahn, car sharing, rental bikes, e-scooters, e-scooters, cabs, etc. This concept offers more flexibility in choosing the most suitable means of transportation and can be integrated into an existing fleet .

If the amount for business and private travel is not fully utilized in the current month, the surplus can usually be used for other purposes or benefits. For example, for a new bicycle or as a subsidy for old-age provision. Particularly economical employees who use public transport or rail, for example, are then additionally rewarded. In addition, a mobility budget creates an incentive to leave the company car at home more often. Especially in crowded urban areas, if you want to avoid traffic jams and the hassle of finding a parking space.

Grafik Stau europäischer Großstädte
So lange stehen europäische Dienstwagenfahrer im Stau.

The alternative to the company car is also attractive for companies from a tax perspective. Many companiestax mobility benefits under “benefits in kind” and thus profit from the benefits quite legally. If employees use their company car for private journeys, the non-cash benefit must be taxed. When it comes to the mobility budget, the type and amount of the budget also plays a role and can have a more tax-efficient impact on costs.

Advantages of a mobility budget

The idea behind the mobility budget is that employees have maximum flexibility in choosing their means of transportation. In the best case, they opt for environmentally friendly alternatives such as public transport or rail. The personal company car will lose its appeal sooner or later. For fleet management, a mobility budget means more efficient and cost-effective management of the vehicle fleet.

But a mobility budget has even more advantages:

For employees:

  • Incentive for sustainable mobility behavior
  • No need to search for parking spaces and less congestion, especially in urban areas
  • More flexibility in mobility
  • Increase in satisfaction

For employers:

  • More inclusion in the company
  • Better cost control through fixed budgets
  • Improvement of the image and differentiation from the competition
  • Promotion of sustainable mobility
"The mobility budget offers employees great flexibility in choosing their mode of transportation, such as public transport or bicycles
The mobility budget provides employees with significant flexibility in choosing their mode of transportation, such as public transport or bicycles.

Mobility budget instead of company car?

According to a study by SAP Concur, 57% of employees who live in the city would like to have a mobility budget. Among employees in rural areas, the figure is 40%.

Even if companies are increasingly willing to organize employee mobility flexibly, it is important that companies first carefully assess the individual needs and preferences of their employees as well as the operational requirements.

Mobility budgets are particularly popular in urban areas, as there is a large selection of e-bikes and car-sharing providers and the local and long-distance transport network is very well developed. The situation is often different in rural areas. The majority of employees here still rely on a company car for business and private journeys. Employees in the field who regularly have to attend customer and business appointments also want to be mobile without much effort. Some sectors, such as trades or care services, also rely on their own vehicles to transport tools, machinery and equipment.

For many companies, a mobility budget is therefore not a replacement for the company car model, but rather an addition to the mobility mix. For many employees, having the choice between the two options already contributes to greater satisfaction.

Observe legal aspects of the mobility budget

Anyone considering the mobility budget as an alternative or supplement to the classic company car should consider the tax and employment law aspects in advance. The tax guidelines for calculating the imputed income for private journeys with company vehicles are clearly regulated by law. The procedures for using a mobility budget not yet. Different rules may apply here, depending on the type of mobility, and costs may be incurred for tax and social security contributions.

It is important to know that budget consumption must be recorded, accounted for and allocated to individual employees on a “source-related” basis. This can be done simply by using software via an app from providers who specialize in this. When implementing a mobility budget for employees, fleet management should always seek legal and tax advice.

Mobility budget for employees: you should consider these steps

Implementing a mobility budget in a company requires not only careful planning, but also the commitment of everyone involved – from the management to the HR and finance departments to the employees themselves.

  1. Objective:The company should set clear targets for the mobility budget, for example better control of costs, greater flexibility or a reduction in thecarbon footprint.
  1. Definition of the budget: The fleet management must define a budget that is available to employees to finance their new mobility. The previous costs for company cars should be taken into account.
  2. Inform and train employees: It is important to inform employees about the change and explain to them how the new mobility budget works. Training or information events can be helpful here.
  3. Offer a wide range of mobility solutions: The company should provide employees with a wide range of mobility solutions that fit within the budget, such as public transportation, car sharing, bicycles or e-bikes.
  4. Monitoring and adjustment: The company should regularly monitor and, if necessary, adjust the mobility budget to ensure that it meets the needs of the employees and that the goals are achieved. It can be helpful to first test the concept with a smaller pilot group and make adjustments.
  5. Rewards for sustainable mobility: The company can also incentivize sustainable mobility, for example by providing additional funding for employees who use public transport or environmentally friendly modes of transport such as bicycles.

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