Belgium’s Commuting Allowance Tax Break Fails to Gain Traction

In late April, the Belgian federal government announced an €80 million energy support package to help citizens cope with rising fuel prices. A centerpiece of the plan was a tax incentive designed to encourage employers to increase or introduce commuting mileage allowances for employees using personal vehicles. But nearly two months on, the measure is struggling to gain traction: barely 4% of companies have expressed interest, according to RTBF.

How the Measure Was Supposed to Work

The Arizona coalition government allocated €60 million—€20 million per month for May, June, and July 2026—to a tax credit scheme. Employers who increase existing mileage allowances or introduce new ones of at least 10 cents per kilometer receive a tax credit covering 20% of the increase, capped at 10 cents per kilometer. For employees, the additional allowance is tax-free. The measure explicitly excludes fuel cards, meaning workers who receive company fuel cards cannot benefit.

Why Adoption Has Stalled

Legislative Delays

The legal framework enabling the increase was only published on June 8, 2026—over six weeks after the measure was announced in late April. As BOSA, the Belgian federal public service for strategy and support, confirmed, the temporary monthly adjustment regime began May 1, but companies lacked legal certainty to act. Valentin Broquet, legal consultant at social secretariat Group S, noted: “The measure is quite recent. Here, we only received the information a few days ago, so it may still take some time before it’s actually implemented within companies.”

Cash Flow Burden on Employers

Employers must pay the increased allowance upfront now, but the tax credit compensation only arrives after filing 2027 tax returns—creating a cash flow gap of over a year. Pieter Timmermans, CEO of the Federation of Enterprises in Belgium (FEB), was blunt: “How do you expect companies to apply a temporary measure with a compensation system in two years, but an immediate cost at a time when companies themselves are also facing rising energy prices?” He called the scheme “not the ideal measure, to put it diplomatically.”

Failed Sectoral Negotiations

Under Belgian labor law, many sector-level changes require collective bargaining agreements. Trade unions from the CSC/ACV attempted to negotiate across sectors but succeeded in only one—the quarries sector, which employs roughly 4,000 people. Piet Van Den Bergh of the CSC Research Department said: “In the vast majority of sectors, we have not been able to conclude a collective agreement to settle this.” He added that retroactive implementation now seems unlikely.

SME Financial Pressure

Bart Buysse, CEO of UNIZO, the Flemish SME organization, acknowledged the government’s voluntary approach was positive in principle but questioned its practical feasibility for small businesses. Belgian SMEs face accumulated cost pressures: approximately 20% wage cost increases over three years due to automatic indexation, rising energy costs, and record bankruptcy levels. Many lack the financial margin to advance additional payments.

Who Is Left Out?

Beyond low corporate adoption, the measure has notable gaps. Self-employed workers—who also face rising fuel costs for business travel—received comparatively less direct support, drawing criticism from the NSZ (Neutral Union for Self-Employed), which asked: “Where is the direct support for self-employed?” The exclusion of fuel cards also means a large portion of the workforce, particularly those in company car culture prevalent in Belgium, cannot benefit.

What This Means for the Government

The low uptake creates an ironic outcome: the government may save a significant portion of the €60 million budgeted for the tax credit. But this fiscal saving comes at a political cost. The measure’s failure damages the government’s credibility on energy support and leaves workers facing high fuel costs without meaningful relief. Opposition MP Pierre-Yves Dermagne (PS) had already called the plan “more of a communication plan than an action plan” when it was announced.

What to Watch For

With the legal framework now published, adoption could theoretically increase in the remaining weeks of the scheme. But the window is narrow—the temporary regime ends July 1, when the ordinary quarterly adjustment system resumes. Questions remain: Will the government extend the measure? Will the self-employed receive additional targeted support? And what will be the broader implications for labor relations after the failure of sector-level negotiations?

For now, Belgium’s well-intentioned commuting allowance experiment serves as a cautionary tale about the gap between policy design and real-world implementation.