Total Cost of Ownership (TCO) Calculation
Table of contents
What is the Total Cost of Ownership?
To calculate the federal mobility budget, the Total Cost of Ownership (TCO) of the employee's (reference) car must be calculated. It is important to discuss the broader context first.
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The TCO calculation for the federal mobility budget is a TCO 2. It concerns the total annual gross costs for the employer of the returned company car or of the company car for which the employee is eligible. Below you can find more information about the definition of TCO 2.
- Total Cost of Ownership (TCO) 1 includes the cost of the vehicle and related car costs, the fuel costs and the CO₂ contribution.
- Total Cost of Ownership (TCO) 2 consists of TCO 1 and additional taxes linked tothe employer tax on benefits in kind (17% or 40% disallowed expenses).
- Total Cost of Ownership (TCO) 3 corresponds to TCO 2 minus the tax savings, which are linked to the deductibility percentage of the recruitment costs, the related car costs, the fuel costs and the CO₂ contribution.
The employer determines whether the TCO is calculated per employee or per job category. If the TCO is calculated per function category, one (reference) vehicle is chosen that represents the category. In this case, averages are also used for all other car-related costs.
The government has established two formulas that the employer can choose to calculate the TCO for the federal mobility budget. Namely the actual cost formula and the fixed value formula. The method that the employer ultimately chooses and uses must be used for at least 3 years. This method is also used for all TCO calculations. Although you always use the fixed value formula for employees who do not benefit from a company car or for employees who change jobs to which another company car is linked. In these situations you do not (yet) have any actual costs that are required for the actual cost formula. In this respect, both formulas can still be active in the company.
Actual cost formula
This is an average of the employer's annual total gross cost of providing a company car to an employee. You calculate the average (if possible) based on the last four calendar years. For example, coincidental high or low costs in a given year are not used as the only reference.The actual costs that must be taken into account can be divided into four categories:
The company car
- Annual depreciation of 20 percent of the purchase price of the environmentally friendly company car or the costs of the rental or leasing. Taking into account the options and accessories charged and the discounts granted;
- Interest on borrowed capital;
- Fuel and/or electricity costs;
- Administration costs relating to fuel and charging cards;
- Costs for making the vehicle roadworthy;
- Insurance costs (incl. franchise costs);
- Costs of the technical inspection.
The charging station
- Annual depreciation of 20 percent of the cost of the charging station and its installation;
- Maintenance and repair costs of the charging station;
- Management costs of the charging station and cable.
Taxes and fiscal aspects
- Tax on registration;
- Road tax;
- Patronal CO2 solidarity contribution for the benefit of the RSZ;
- Non-recoverable VAT on all cost items;
- Tax on the non-deductible portion of the above items;
- Tax on the part of the benefit in kind that constitutes a disallowed expense.
Other costs
- Toll and parking costs;
- Cleaning, maintenance and repair costs;
- Costs of a replacement car;
- Costs for replacing, exchanging and storing the tires;
- Expert costs upon return of the vehicle at the end of the contract or in the event of a change of driver;
- Repair costs inventoried upon return of vehicle at end of contract;
- Management costs of services.
Fixed value formula
For the fixed value formula, you must make a division between rented or leased company cars and company cars owned or via financial leasing. In both cases you have to add a fixed component to a variable component.
Rented or leased company cars
The fixed component:
Annual rental or lease cost + average other annual costs* + non-deductible VAT + tax on non-deductible car costs + CO2 solidarity contribution
The variable (fuel) component:
(6,000 + one-way distance from home to work x 2 x 200) x 0.13
This corresponds to 6,000 private kilometers plus commuting for 200 working days, multiplied by 30 percent of the exempt flat-rate kilometer allowance that the state pays to its staff.
* This concerns all other costs that are not included in the lease or rental cost. The cost list under the “Actual Cost Formula” section is used here as a reference. An average cost of the past three years should be used here.
Company cars owned or through financial leasing
The fixed component:
Catalog value of the company car x 0.25 + tax on non-deductible car costs + CO2 solidarity contribution
We work with 25 percent of the catalog value. The government equates this to the cost of an average vehicle that travels 30,000 kilometers per year.
The variable (fuel) component:
(6,000 + one-way distance from home to work x 2 x 200) x 0.13
This corresponds to 6,000 private kilometers plus commuting for 200 working days, multiplied by 30 percent of the exempt flat-rate kilometer allowance that the state pays to its staff.
Do not forget!
- Adjustments may need to be made to the actual cost formula at the end of the calendar year or at the end of the lease contract. The actual costs must be taken into account here. Estimations that were not made correctly during the calculation must still be included in the mobility budget.
- Costs for business travel may always be ignored when calculating the TCO. The employer decides on this. If these costs are not included in the TCO, they must always be paid on top of the mobility budget.
- If the employer decides to switch from the actual to the flat-rate method (or vice versa) after a period of three years, this will only have consequences for employees who newly participate in the statutory mobility budget.
- Finally, if you, as an employee, pay a personal contribution to use a company car, the amount will be deducted from the federal mobility budget.
Example
The company wants to implement the mobility budget for its youngest job category. A TCO must be calculated for this. The chosen reference car for this category is a Seat Ibiza (25,000 km/year for 5 years, CO2 emissions 113 g/km), the company usually works with an operational lease. The company opts for the fixed value formula for simplification.
The data:
- The monthly lease cost for the car is 393 euros (excl. VAT);
- Other costs provided for in the car policy amount to 40 euros per month (excl. VAT) for carwash & parking. There is no charging station fee and fuel costs are not included in the lease cost;
- Corporate tax is 25%;
- The VAT deductibility is done at a flat rate, and is therefore 35%;
- The tax deductibility of the company car is 66.33%;
- The CO2 contribution is 1,092.00 euros;
- The average commuting distance of the category is 15 km (one way).
The calculation:
Lease costs & other costs:
393 euros x 12 = 4,716.00 euros + 40 euros x 12 = 5,196.00 euros.
VAT:
5,196.00 euros x 21% VAT = 1,091.16 euros x 65% (non-deductible VAT) = 709.25 euros.
Tax:
5,196.00 euros x 33.67% (rejected expenses) x 25% = 437.44 euros.
Fixed component:
5,196.00 + 709.25 + 437.44 + 1,092.00 = 7,434.69 euros.
Variable component:
(6,000 + (15 x 2 x 200)) x 0.13= 1,560.00 euros.
The TCO of the Seat Ibiza, or the mobility budget for the junior category:
7,434.69 + 1,560.00 = 8,994.69 euros.
FYI!: This budget may never be less than €3,164 (2025) and never more than 20% of the employee's total gross annual salary, with a maximum of €16,875 (2025).
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Depending on the expenditure taxes and social contributions are paid. Commute expenses for parking, bike and public transport are tax and social contribution free. Commute expenses for other mobility services are not tax free, this can influence personal tax income (employee) & company tax (employer). But are social contribution free. Mobility Expenses for private reasons are handled like it is gross wage.
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To correctly calculate the Total Cost of Ownership (TCO) for the Belgian mobility budget, include all costs related to the company car such as purchase or lease price, fuel, insurance, maintenance, taxes, and depreciation. This calculation can use actual costs or a lump-sum formula, ensuring all relevant expenses are considered over a four-year reference period.
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