Mobility credit: what it is and how to set it up in your company

Mobility credit: the context

Today, 30% of CO2 emissions are linked to the automobile. Faced with this environmental challenge, the mobility credit scheme enables companies to considerably reduce their carbon footprint and becomes a key element of their CSR policy. Indeed, the mobility credit acts on environmental performance by limiting the use of individual cars and encouraging soft and shared mobility. It also has an impact on social performance by providing solutions to employees' travel problems, increasing their flexibility and therefore their well-being at work. Finally, the mobility credit is a lever for economic performance: by making travel more efficient, by eliminating the cumbersome nature of fleet management, and by making it possible to control costs, the system also meets a financial challenge.  

Although the mobility credit has existed for about ten years, it was mainly reinforced by the LOM law of December 2019. This contains measures relating to car fleets in order to encourage their greening. Thus, all fleets of more than 100 vehicles have an obligation of greening with the switch to electric and plug-in hybrid vehicles with emissions of less than 60g/CO2 km. However, there are currently no sanctions in place and the changeover depends on the goodwill of companies.

According to a study by theArval Mobility Observatory of 300 companies surveyed, car fleets in France today have an average of 164 vehicles per fleet. The size of French fleets is significantly higher than European fleets, which have an average of 85 vehicles. We can therefore understand the major challenge of greening French car fleets, even if the above-mentioned study highlights encouraging developments. 57% of fleets are equipped with at least one vehicle with an alternative engine, and new, more virtuous uses are emerging, such as car-sharing (practiced by 67% of companies surveyed) and car-pooling (71%).

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Mobility credit: definition

The mobility credit is a scheme aimed at employees who have, or are eligible for, a company or statutory vehicle, and which consists of replacing all or part of the value of said vehicle with a mobility credit capital. This compensation takes the form of a variable budget envelope (often between 3,000 and 10,000 euros a year) dedicated to mobility (transport season tickets, train tickets, car hire for business trips and even family vacations, etc.). It can be granted by the employer to an employee who agrees to give up all or part of his or her company car (or who opts for a smaller, less expensive company car) for business and personal travel. However, this is an incentive and the employee is not obliged to take advantage of it.

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There are three options when setting up the mobility credit:

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• Option 1 - Partial waiver : 

The employee can choose a less expensive and more environmentally friendly vehicle and receive the difference in value in the form of a mobility credit. This option is applicable both to employees who have a company car that they need for their work and to those who have a company car.

• Option 2 - Car Sharing.

The company provides its employees with car-sharing vehicles for their business trips only. All or part of the value of the company car normally promised in their contract is then credited in the form of a mobility credit.

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• Option 3 - Full waiver: 

The entire value of the car benefit is converted into a mobility credit. This option is more suitable for people who have a company car than for those who use their company car on a daily basis for work purposes.

Which employees are eligible for the mobility credit?

An employee is eligible for the mobility credit as soon as he/she benefits, or can benefit, from a company/statutory car. It is important to note that it is the employee's choice if he/she wants to benefit from it.

Here are some typical employee profiles that are good candidates for the mobility credit:

• The employee who is offered a statutory vehicle when he or she joins the company as part of his or her package, but who lives in the city and, ultimately, the car is more of a constraint for him or her, he or she wants to have other mobility options.
  
• The employee for whom the long-term lease of his or her company vehicle is coming to an end and for whom the question of renewal or a possible change of system is therefore raised.
  
• The executive couple, each with a company car. One of them is ready to part with his company car or to move to a smaller model, and to benefit from an additional allowance for other types of mobility.
  
  
  

What types of expenses can be covered by the mobility credit?

The mobility credit offers the following choices for the employee:

• Possibility of financing the provision of a less polluting company vehicle;
• Possibility of using the balance of the mobility credit for the use of sustainable transport such as scooters, bicycles, car-sharing, car-pooling, organized public transport;
• Possibility to buy train tickets, for business trips but also for family trips;
• The portion of the mobility credit not used by each employee may be returned to him or her each year.

What are the advantages of the mobility credit for companies?

The mobility credit meets the objectives of several stakeholders within the company.

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For CSR departments, the system allows for a reduction in CO2 emissions through the greening of the vehicle fleet, its reduction or elimination. 

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For finance/purchasing/fleet management functions whose objective is to optimize costs / reduce the cost of the vehicle fleet, mobility credit is a simpler (less management related to vehicle allocation, repairs, accidents, fines, etc.) and less expensive solution. 

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For human resources departments, the system allows them to strengthen their employer brand by offering employees the mobility best suited to their needs. It is a strong sign of the employer's commitment to the well-being of its employees. In addition, the new generation on the job market is very sensitive to CSR/ecological issues and the mobility credit thus contributes to the attractiveness of the company.

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What are the advantages of the mobility credit for employees?

The mobility credit allows employees to benefit from:

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• greater purchasing power;
• a reduction in stress linked to car journeys (traffic, parking problems), and ultimately, a better quality of life at work;
• new, more environmentally friendly mobility and the possibility of reducing their personal carbon footprint;
• a great flexibility of means of transport (bicycle, public transport, train, shared mobility), by adapting the means to the purpose of the journey (vacations, individual personal travel, group, etc.).

Finally, the mobility credit allows employees to actively participate in reducing the company's carbon footprint. 

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Use cases

Here is a concrete example with Hélène's company car. 

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Hélène has a company sedan, a benefit granted to all executives in her company. The annual cost to the employer is €9,000. She decides to change this vehicle for a less polluting car, which costs €4,500 per year. She can therefore use the remaining €4,500 under the mobility credit. She buys an electric bike for €1,400 and train tickets for family trips for €1,300. There is €1,800 left over that the company can decide to pay back to her at the end of the year.

Taxation of mobility credit: a benefit in kind

The mobility credit is subject to the common tax and social security system.

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For the vehicle, the tax system applied is that of a company car (benefit in kind). For the budget envelope, it is the tax and social regime applicable to a salary (salary category). The employer therefore pays employer's contributions on the basis of the budget that constitutes the mobility credit. For his part, the employee includes this amount in the category of deferred remuneration, such as a vacation bonus, for example.

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In conclusion, for the company, the mobility credit is a solution that respects the environment and optimizes its costs. For the employee, it is a tailor-made solution that can be adapted to any type of need and increases purchasing power.

And if you wish to discuss your issues with one of our social policy and employee benefits experts, please send us your request by clicking here.

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