In future, employees will no longer have to pay tax on a mobility budget. This is to be made possible by an amendment to the law, which is due to come into force at the end of 2024. Cash allowances will then also be tax-free. What conditions employers will have to fulfill.
Employers can already offer their employees a mobility budget. With a mobility budget, employees can individually choose the ideal means of transportation for their journeys. The choice includes public transport such as buses and trains, rental bikes, e-scooters, car sharing or cabs.
However, employer allowances in cash for private travel costs are currently taxable. Employees have to pay tax on this.
This will change soon: in June, the Federal Cabinet approved the government draft of the Annual Tax Act 2024. This contains a new regulation for the taxation of mobility budgets.
In future, employees will no longer have to pay tax on a mobility budget if their employer pays the income tax to the tax office. This means that if employers pay a flat-rate tax of 25% on the actual expenses incurred as part of the mobility budget, their employees will no longer have to pay tax.
These conditions must be met for employees not to pay tax on their mobility budget:
With a mobility budget enshrined in law for the first time, the federal government wants to promote mobility that is as environmentally friendly as possible. The focus is on flexible mobility offers, including car sharing, bike sharing, e-scooters and other sharing offers.
Excluded from the regulation are air travel, costs for private vehicles and company cars provided on a permanent basis as well as other company vehicles. The flat-rate taxation also does not apply to permanent car rental, leasing or subscription models. Employers can therefore neither pay the leasing rate for the employee's private car nor grant a tax-privileged car subscription. Fuel costs and repairs are also excluded.
The mobility budget can include not only vouchers and prepaid cards, but also an employer allowance in cash. This was always taxable in the past. It is also possible to have the costs reimbursed retrospectively.
The new regulation will not apply to business travel expenses. After all, employers can cover purely business-related travel costs anyway and deduct them from tax as business expenses. The same applies in principle to journeys between home and work, although taxation depends on the means of transportation.
For journeys between home and work, employers can, for example, pay for a tax-free job ticket (including the Germany ticket) for employees or at least cover part of the costs. Companies can also make use of the non-cash benefit exemption limit of 50 euros per month for this purpose. This can also be used for a mobility budget.
Employers do not have to offset employee benefits, such as a job ticket or a company bike, against the flat-rate taxable amount of 2,400 per year for the mobility budget. They can continue to be granted independently of this.
For privately used company cars that are exempt from the new flat-rate taxation, companies have two options: applying the 1 percent rule and keeping a logbook. With the 1 percent rule, one percent of the gross list price is subject to wage tax each month. Tax concessions are available for electric and hybrid cars: Depending on the level of CO2 emissions, the gross list price and the time of purchase, employees must pay tax on a privately used company car at 0.5 percent or 0.25 percent of the gross list price.
If companies want to provide their employees with flexible and sustainable mobility options, they will in future be able to grant them a tax-free mobility budget of up to €2,400 per year if they pay the wage tax for the mobility budget. Last but not least, this should make it easier for employers to implement a modern mobility concept with minimal bureaucracy in order to create incentives for company car alternatives and promote sustainable mobility.
The Annual Tax Act 2024, which provides for the flat-rate taxation of mobility budgets, is currently in the legislative process. At the beginning of June 2024, the Federal Cabinet approved the government draft for the Annual Tax Act 2024 (JStG 2024), which is now being discussed in the Bundestag and Bundesrat. The final law is expected to be passed in the second half of 2024.
