Cash incentive to ditch the company car moves a step closer

The Belgian federal parliament has moved a step closer to agreeing a compensation package that aims to take up to 50,000 company cars off of the country's roads.

The "cash for car" incentive would offer the possiblity for employees to hand back their company vehicle in return for an annual "mobility allowance" with the same tax and social charges benefits.

The amount would be based on the car's value and indexed annually - and could be used to buy a smaller vehicle, an electric bicycle or a public transport pass, for example.

According to an estimate by federal finance minister Johan Van Overtveldt, somewhere between 3% and 9% of households could find the offer attractive, meaning somewhere between 15,000 and 50,000 fewer company cars on the road.

The draft law on the mobility allowance has now been approved by the parliament's finance committee. Benoît Dispa, from the cdH party, said the government had "missed a great opportunity" in this draft law to completely overhaul Belgium's company car system.

Last year, the European Commission told Belgium that it must urgently discourage the use of company cars. The country pays out the most of all the members of the OECD in subsidies for cars.