What is the TCO of a company car?

A brief overview of the definition Total Cost of Ownership.

Jeroen Beuls avatar
Written by Jeroen Beuls
Updated over a week ago

The mobility budget is based on the total gross cost of the employer to provide a company car to the employee for one year. The law allows two methods to calculate the TCO. TCO2 is always the starting point used to calculate the mobility budget.

Calculation methods

1️⃣ Actual cost formula

2️⃣ Lump-sum value formula

The employer has the chose to do the calculation per employee or per function category.

A more complete overview of the two methods can be found here.

1️⃣ Actual cost formula

In the method the employer is going to use actual costs of the company car. All costs should be an average of the last four years. If there are figures of the last four years.

The company car

  • The lease cost/the rent cost/the purchase cost*;

    • Taking into account all options, accessories & discounts

  • Fuel/electricity cost;

  • ...

Fiscal aspects

  • The annual CO2-solidarity contribution;

  • The non-deductible VAT;

  • The tax on the rejected expenses on car costs, on fuel costs and on BIK;

  • ...

Charging station

  • Charging station & installation*;

  • Maintenance and repair costs of the charging station;

  • Management costs of the charging station and cable.

Other costs

If covered by the employer based on the car policy:

  • Carwash;

  • Parking;

  • Cost for a replacement car;

  • ...

*From the law, it is mandatory to divide this cost by five to calculate the annual cost. In this way, the law equates this cost to an annual amortization of 20%.

2️⃣ Lump-sum value formula

For the lump-sum value formula, you have to make a split between rented or leased company cars and company cars owned or via financial leasing. In both cases, you add a fixed component to a variable component.

Rented or leased company cars

The fixed component:

Annual rental or lease cost + average other annual cost + non-deductible VAT + tax on non-deductible car cost + CO2 solidarity contribution

The variable component:

(6,000 + commuting distance x 2 x 200) x 0,13

Company cars owned or via financial leasing

The fixed component:

List value of the company car x 0.25 + employer CO2 solidarity contribution

The variable component:

(6,000 + commuting distance x 2 x 200) x 0,13

Mobility budget limits

The yearly amount of the mobility budget has an upper and a lower limit. The mobility budget can not be lower than 3.055 euro and not higher than 16.293 euro. The mobility budget can also not be higher than 1/5 of the total gross salary of the employee. It is important that the TCO is checked for these conditions.

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