How to choose the right tax scheme for the mobility budget: A guide for internal communication

An effective mobility budget can not only increase employee satisfaction, but also offer tax advantages for your company. But how can you make the complex topic of taxation understandable to your finance department? In this article we show you how to make the right choice.

Introduction

Introducing a mobility budget in your company is a smart way not only to increase employee satisfaction, but also to save taxes. But how do you decide which tax model best suits your company? Here are 7 steps to convince your internal tax and finance department of the best choice:

Content

1. Understand the basics
2. Identify the right contact person
3. Emphasise the advantages
4. Link with goals
5. Use case studies
6. Answer questions
7. Transparent communication and decision-making

Next, we have compiled the most important tax aspects related to the mobility budget and company mobility offers and show where you can find further information on the tax treatment of the mobility budget.

1. Fiscal aspects of the mobility budget
2. You can benefit from these tax advantages with a mobility budget
3. Remuneration in kind and the method of settlement
4. Further tax aspects of company mobility offers
5. Information on the tax treatment of mobility budgets

‍

How to tell your finance department to choose the right tax scheme for the mobility budget - 7 steps

‍

Step 1: Understand the basics

Before you talk to your tax and finance department, familiarise yourself with the different tax models for mobility budgets and other mobility offers. Find out about the advantages and disadvantages of concepts such as benefit in kind, tax exemption and lump sum taxation as well as salary conversion and research how mobility budgets, job tickets, bicycle leasing or company car regulations are structured in this respect.

These taxes and charges in the payroll are influenced by a mobility budget:

• Wage tax
• Social security contributions (health, pension, long-term care and unemployment insurance)

The better informed you are, the more convincing you will be. Involve the following external experts or advisors to get objective insights:

• Tax adviser
• Experts in tax law
• Mobility budget provider

Step 2: Identify the right contact person

Once you have familiarised yourself with the topic of mobility budget taxes and worked out the different tax models and their advantages and disadvantages, it is important to identify the right contact person in your company to establish the mobility budget internally. Make sure that your contact person is involved in the relevant decision-making processes in the company.

Step 3: Emphasise the advantages

Highlight the advantages of each tax treatment. Justify how it reduces the financial burden on the company, simplifies administrative processes and at the same time increases employee motivation. Finance departments appreciate pragmatic approaches that both save costs and promote corporate culture.

Step 4: Link to goals

Explain how the chosen tax model harmonises with the company's objectives. If sustainability is an important corporate value, explain how the model promotes environmentally friendly mobility alternatives. If cost efficiency is a focus, show how the chosen model will deliver savings. Highlight how any proposed tax benefits will benefit both employees and the company.

Make sure you provide space for questions and discussion to get a clear picture of the finance department's concerns and priorities.

Step 5: Use case studies

Illustrate the theoretical information with practical case studies. Share examples of companies from similar sectors that have successfully implemented a mobility budget and show how they mastered the topic of taxes and were able to extract the optimal tax model for themselves. After all, concrete success stories can significantly increase the power of persuasion. These companies, for example, have benefited from a mobility budget:

For the Lufthansa Innovation Hub, the mobility budget has paid off financially as a tax-free benefit in kind. In addition, all employees benefit from trips with environmentally friendly means of transport such as public transport, which are tax-free.

With a virtual credit card, the employees of the Chrono24 watch marketplace have received a tax-free net budget that they can use for their personal mobility in an uncomplicated and flexible way. The integration of the mobility budget solution into the internal HR and payroll systems has also tax-optimised monthly accounting and made the team's work easier.

You can also back this up with figures. Compared to a salary increase, your company can save on wage costs with a mobility budget, as this example calculation shows:

Salary increase (gross)

Mobility budget (50-euro benefit in kind)

Employer wage costs

108€

50€

Gross salary

91€

50€

Wage tax (here 25%)

23€

0€

Social security employee contribution (approx. 20%)

18€

0€

Social security Employer's contribution (approx. 20 %)

18€

0€

Employee benefit (net)

50€

50€

‍

Step 6: Answer questions

Be prepared to address questions and concerns from the tax and finance department. Have information available on the tax implications and possible risks. 

Here are some questions that may arise when communicating with your tax and finance department:

• How does the taxation work if different means of transport were used with the mobility budget?
• Which settlement form of the mobility budget keeps the administrative effort as low as possible?
• How do the individual tax characteristics of the employees affect the taxation of the mobility budget? 
• What happens to unused mobility budget?
• Can I combine a credit card and refunds? If so, how does the taxation work?
• How does the mobility budget provider ensure that the mobility budget is settled in a tax-compliant and tax-optimised manner and that legal regulations are adhered to (keyword "compliance")?

If you cannot clarify uncertainties immediately, promise to provide the necessary information in a timely manner. NAVIT is your reliable partner and will gladly answer the most important questions so that you are well prepared.

Step 7: Transparent communication and decision-making

Ensure open communication with the finance department throughout the decision-making process. Emphasise the importance of considering the opinions and expertise of everyone involved. Ultimately, you should make an informed decision together that takes into account both the financial goals of the company and the needs of the employees.

Conclusion

Choosing the right tax model for introducing a mobility budget requires close cooperation between the finance department and the HR department, which is responsible for employee benefits such as the mobility budget.

Through clear communication, emphasis on benefits and transparent decision-making, the company can take advantage of tax benefits that successfully support both the company's goals and the individual needs of its employees.

‍

Tax aspects of the mobility budget - Overview

Which taxation a company chooses when introducing a mobility budget depends on various factors, including the legal framework, company objectives, employee needs and the company's financial situation.

If employers offer their employees additional benefits on top of the regular salary, the nature of these benefits influences the tax treatment. A common form of such additional benefits is the benefit in kind (Sachbezug), which remains tax-free within a certain tax-free amount. The tax-free amount is 50 euros in 2023.

‍

You can benefit from these tax advantages with a mobility budget

• Payment in kind: The mobility budget can be accounted for as a payment in kind. There is a tax-free limit of 50 euros.
• Flat rate: For benefits in kind exceeding 50 Euros, the entire amount is settled at a flat rate of 30% tax (plus social security contributions).
• As a salary supplement: Salary conversions from cash salary to salary in kind are usually subject to tax and social security contributions. It is therefore worthwhile to grant the mobility budget as a benefit in kind in addition to the contractually agreed salary.
• Tax-free public transport: Journeys by public transport are tax-free. Companies can offer job tickets, the new Deutschlandticket or a public transport allowance in addition to salary and mobility budget.
• Tax-free bicycle: Employers can provide their employees with a company bicycle free of charge or at a reduced price in addition to their salary and mobility budget. The provision of a bicycle is not a non-cash benefit and is therefore exempt from wage tax and social security contributions.

Remuneration in kind and the method of settlement

The question of whether a mobility budget is considered a benefit in kind (Sachbezug) or can claim other tax benefits depends on the accounting method. Basically, three different mobility budget solutions have become established.

• Option 1 (invoice submission) and option 2 (mobility budget app): As a rule, a mobility budget cannot be treated as a benefit in kind here. This is due to the fact that subsequent cost reimbursements are considered cash wages according to § 8 para. 1 sentence 2 EStG and are therefore taxable. However, there are exceptions according to § 3 No. 15 EStG:

• If one uses public transport (ÖPNV), journeys - whether for business or private purposes - are exempt from tax and social security contributions. The aim is to promote environmentally friendly means of transport.
• If one uses long-distance trains or long-distance buses for the transfer between one's place of residence and one's place of work or first place of employment, such journeys are also exempt from tax and social security contributions. Other mobility offers, such as sharing services, are excluded from this regulation.

• Option 3 (prepaid cards): Pursuant to section 8 (1) sentence 3 EStG, prepaid cards or credit cards are considered a benefit in kind and can be given to employees within the specified allowances. However, specific criteria apply according to Section 2 (1) No. 10 of the Payment Services Supervision Act (Zahlungsdienstaufsichtsgesetz, ZAG), which must be met. It is important to note that the tax allowance only applies to predefined goods or services that serve a limited network or specific tax purposes, such as personal mobility.
• Exceeding the tax-free amount: If donations exceed the tax-free amount, a flat-rate taxation of 30 per cent applies in accordance with § 37b EStG, provided that the donations do not exceed 10,000 euros in the financial year.

The tax treatment depends on various factors, including the type of mobility, the accounting method and the individual allowances. Careful consideration, as well as consultation with tax experts if necessary, is essential to find the optimal tax solution.

Also note that the tax regulations only apply if the mobility budget is granted in addition to the regular salary. Offsetting it against the existing salary usually leads to a salary conversion subject to tax and social security contributions.

Further tax aspects of company mobility offers

1. Company car taxation: This programme allows companies to provide company cars to employees. The taxation is based on the imputed income that the employees derive from the use of the vehicle. This programme is well suited if the company owns a fleet of company cars or if individual employees have high mileage.
2. Company car private use: Employees can also use the company car for private purposes, which is taxed as a non-cash benefit. This programme offers employees flexibility and can be attractive if the company car is used for both business and private purposes.
3. Job ticket and public transport subsidies: Companies can provide their employees with subsidies for public transport or job tickets. This promotes environmentally friendly mobility and can be financially beneficial, especially in urban areas with good transport infrastructure. 
4. Bicycle leasing: This programme allows employees to lease bicycles through their employer and pay tax on the monetary benefit. You can find all the necessary information on bicycle leasing here.

Choosing the best tax model for your company requires a thorough analysis. Our mobility experts can accompany you on the way to a mobility budget and are happy to help you with questions and uncertainties in order to make the mobility budget a success in your company. 

Where can I find more information on the tax treatment of mobility budget?

For more information on the tax treatment of the mobility budget and other mobility benefits, we recommend that you use the following sources:

• Federal Ministry of Finance (BMF): The official website of the BMF provides information on tax rules and regulations in Germany. You can search for publications, laws and regulations related to employee compensation, benefits in kind and mobility budgets. For example, you can find the legal basis for remuneration in kind.
• Federal Central Tax Office (BZSt): The BZSt is an important contact point for information on taxation and provides information on tax topics, including employee remuneration and benefits in kind.

‍

Relevant legal bases for the mobility budget and taxation are listed here:

• Distinction between cash benefit and benefit in kind: BMF letter dated 15.03.2022
• 50 Euro benefit in kind: § 8 para. 2 sentence 11 EStG
• Exemption limit 50 euros for benefits in kind: § 8 para. 2 sentence 11 EStG & R 8.1 para. 3 LStR
• Tax treatment of benefits in kind: § 8 para. 1 EStG‍
• Voucher issuing: R 38.2 para. 3 sentence 1 LStR

Please note that tax rules and regulations can change, so it is important to access up-to-date and trustworthy sources.

If you have any questions about taxes and accounting, please contact our mobility experts! Book a call with us now, where we will explain in detail how the mobility budget works, which tax model is ideal for your company and how a mobility budget can help your company.

‍

Further resources

Öko-Institut e.V. (ed.) (2022): Sechs Thesen zum Mobilitätsbudget: Leitplanken für eine nachhaltige Unternehmensmobilität (Six Theses on the Mobility Budget: Guardrails for More Sustainable Corporate Mobility). https://www.oeko.de/fileadmin/oekodoc/compan-e_Thesen_Mobilitaetsbudget.pdf (retrieval date: 25.08.2023)

Leine, Jörg (2023):  Steuerfreie Extras vom Chef, in: Finanztip. https://www.finanztip.de/steuerfreie-sachzuwendungen (date of retrieval: 25.08.2023)

Federal Ministry of Justice (n.d.). Income Tax Act (EStG) § 3, number 15. https://www.gesetze-im-internet.de/estg/__3.html (date of retrieval: 30.08.2023)

Federal Ministry of Justice (o. J.). German Income Tax Act (EStG) § 8 Einnahmen. https://www.gesetze-im-internet.de/estg/__8.html (date of retrieval: 30.08.2023)

Federal Ministry of Justice (n.d.). Income Tax Act (EStG) § 40 Lump-sum wage tax in special cases. https://www.gesetze-im-internet.de/estg/__40.html (retrieval date: 30.08.2023)

NWB Verlag (o. J.). BMF v. 15.08.2019 - IV C 5 - S 2342/19/10007 :001 BStBl 2019 I p. 875; tax exemption according to § 3 number 15 EStG. Letter from the BMF at https://datenbank.nwb.de/Dokument/806050/ (retrieval date: 30.08.2023)

‍