Goodbye company cars – mobility budgets are becoming more popular

Despite tax incentives, the company car status symbol is losing its appeal. Companies like SAP are looking for an alternative to remain attractive employers for young talents and to reduce expensive fleets of company cars. “The younger generation demands that,” says Nicola Büsse, Managing Director of Mobiko based in Munich, which manages mobility budgets for 130 companies.

A survey by the Handelsblatt among the 40 Dax companies also shows that there is movement on the subject. In addition to SAP, Nivea manufacturers Beiersdorf and Siemens Energy have already introduced such a mobility budget. Beiersdorf already in 2013, Siemens Energy since its spin-off three years ago.

Here, too, employees can use their budget for all forms of mobility apart from a company car. At Siemens Energy, a third of the eligible managers have opted for it. Eon has also had such a budget since the beginning of the year. Here, however, managers can still select the car from the fleet.

Other companies also want to introduce mobility budgets

At Adidas and Heidelberg Materials, eligible managers who do not want a company vehicle receive a monthly allowance. A third of the sporting goods manufacturer would therefore decide against the classic company car. And Covestro got rid of the company car altogether at the beginning of 2018. Since then, senior executives at the chemical company have received a monthly payment.

The number of mobility budgets on offer is likely to increase further in the future. Eight Dax companies, including Allianz, BMW, Continental, Daimler Truck and Hannover Re, are currently examining whether they want to introduce such a budget. Eleven companies did not respond to the request.

However, the majority of the companies surveyed are still cautious on the subject. One reason: mobility budgets are less tax-efficient, and company cars are heavily subsidized in Germany. Employees only have to pay tax on one percent of the gross list price as a monthly benefit in kind, for electric cars up to 60,000 euros it will only be 0.25 percent by 2030.

tax difficulties

The taxation of the mobility budget depends on several factors: is it paid as a salary supplement or not? The latter is the rule, otherwise the amount would be subject to tax and social security contributions. If the mobility budget is billed as a benefit in kind, there is a tax exemption of 50 euros per month, plus a flat rate of 30 percent.

The choice of transport also plays a role: if the employee uses local public transport, no tax is due. If you take a taxi or rent a car, you have to pay.

This confusion is a hindrance. The pharmaceutical supplier Sartorius, for example, is dealing with the topic. But “tax aspects do not make the introduction easy,” it says. And at Bayer, those responsible explicitly do not want to introduce the model “due to the existing income tax restrictions and the administrative complexity of this model”.

“For more than a year, more and more traditional companies have been interested in it”

Various start-ups see this as an opportunity and offer solutions for companies. Mobiko from Munich is one of the pioneers, one of the investors is Audi. Rydes in Berlin, who look after around 100 companies, finances Lufthansa, among other things.

According to Rydes boss René Braun, the acceptance of mobility budgets among companies is increasing. “In the beginning it was technology companies and consultancies,” says Braun. “But for a good year now, more and more traditional companies have been interested in it.”

Companies want to attract younger and urban employees. Meanwhile, the mobility budget also helps to achieve internal climate goals. SAP wants to be CO2-neutral by 2030.

The example of SAP project manager Fempel shows how the concept is also received by other groups of employees. Fempel has been working for the Walldorf group for 25 years. “The mobility budget has made me rethink things, away from the car and towards public transport,” says Fempel, who has already taken part in two pilot projects on the mobility budget.

How much money SAP gives its employees is not revealed. Other Dax companies are also reluctant to give details. The only thing that is clear is that everyone gets the same amount, with the exception of the board of directors. According to an evaluation by Mobiko, around half of German companies pay between 50 and 200 euros a month.

Strong promotion in other countries

Mobility budgets are heavily promoted in other countries such as Belgium or the Netherlands. According to Mobiko, by far 37 percent of employees use the mobility budget for local public transport, and trains are also used a lot at twelve percent. In second place, however, is refueling with 17 percent, which is also becoming greener with electric cars.

SAP fleet manager Krautwasser would like more attention to be paid to the topic in political Berlin: “By that I don’t mean tax equality with the company car, even if that would be desirable. A binding regulation would be enough for me.” Now one has the feeling that things could change at any time.

The amazing thing: In 2021, the Ministry of Transport in Berlin developed a recommendation for action for the promotion of mobility budgets. But with the change of government, the topic has disappeared from the agenda – even though the Greens are in the coalition.

“We don’t want to replace the company car,” says Managing Director Büsse of Mobiko. “But it’s no longer up to date to prescribe how you have to get around.” The mobility budget for SAP employees may have one disadvantage: it expires at the end of each year if it is not used up.

More: What alternatives to the company car do the Dax companies offer?