7 Frequently Asked Questions (and Answers!) about a Company Bike

Which Bike Schemes Can I Choose from?

Currently, there are four different schemes to choose from:

• • a company (lease) bike

• • using part of the gross salary

• • a mileage allowance

• • an interest-free loan

Your situation as an employer determines which scheme(s) you can use. The type of company bike your employee chooses doesn’t matter for the schemes, whether it’s an e-bike, speed pedelec, mountain bike, or any other type of bike.

 

What Does the ‘Company Bike’ Scheme Entail?

As an employer, with a company bike scheme, you can lease or buy a bike that you then make available to your employees. This bike scheme is also known as the bike plan. Unlike other schemes where the employee owns the bike, a company bike is literally that: owned by the company.

Using a company bike can affect other allowances. For example, employees using this bike scheme are not eligible for tax-free travel allowances for the same commuting kilometers. However, if they travel to work using another mode of transport or public transport, they can still receive compensation for those kilometers.

 

What should Employers Keep in Mind?

Since the benefit of private use of the bike is considered payment in kind, there are several tax rules for employers:

• • You withhold payroll tax and social security contributions on this income;

• • You pay employee insurance premiums and employer’s health insurance contribution on this income;

• • You can designate this income as final levy income if you have enough free space for it.

Good to know:

• • The travel allowance can remain tax-free for days when your employee travels to work by other means;

• • There is no tax-free mileage allowance for commuting by bike;

• • You can deduct the costs for the bike from your profits according to annual depreciation.

• • The VAT can only be deducted wholly or partially in certain cases.

 

Can your Employee Use the Bike Unlimited for Private Purposes or Only for Commuting?

With a company bike, the bike can be used unlimited for private purposes, as the employee pays an additional tax for private use. This amounts to 7% of the consumer recommended price (including VAT) of the bike.

 

Calculation Example

Suppose the recommended price of the electric bike your employee has chosen is 2,000 euros, then the annual additional tax of 7% amounts to 140 euros. As the employer, you pay employee insurance premiums and employer’s health insurance contribution on this amount.

The employee in turn pays income tax and social security contributions on this amount. When the gross annual salary of this employee is 35,000 euros, this amounts to 4.30 euros per month for a bike of 2,000 euros (price level 2023).

Does the employee contribute to the bike? Then the monthly personal contribution can be deducted from the additional tax amount, provided the monthly contribution is lower than the additional tax amount itself.

How Do the other Bike Schemes Work?

Instead of a company bike, you can also choose another bike scheme:

 

Using Part of the Gross Salary

As an employee, you can use part of your income to buy a bike. This amount falls under the final levy income. The employer pays no tax on this, as long as the amount stays within the free space of the work costs scheme.

Since the amount is deducted from the gross salary, both the employee and employer benefit from tax advantages.

A Mileage Allowance

As an employee, you can also buy the bike with the money you receive as compensation for the kilometers you cycle to work. An allowance up to 23 cents per kilometer is tax-free.

An Interest-Free Loan

As an employer, you can also make the purchase amount for a bike available as an interest-free loan to your employee. This doesn’t count against the free space, as your employee repays the loan, possibly through the mileage allowance.

 

How Does the New Bike Plan Scheme Differ from the Old one?

Under the old scheme, employers still had to determine the actual value of the private use benefit. In the new bike plan, this value is set at a fixed rate and the employee must pay an additional tax of 7%.

The new bike scheme therefore makes things administratively much simpler and prevents discussion. It no longer matters whether your employee uses the bike to come to work or only makes private kilometers with it.

 

Can I also get a Company Bike as a Self-Employed Person?

Yes, you can. In that case, just make sure you use your bike for at least 10% business purposes.

For your income tax, you need to consider the following things:

• • The 7% additional tax of the recommended price of your bike is added to your profit;

• • The purchase costs can be deducted from your profit in parts based on the annual depreciation;

• • Any additional costs such as bike insurance, repairs, or accessories are also deductible;

• • You cannot charge a travel allowance for business kilometers.

Regarding VAT deduction, you can deduct the VAT of the purchase costs and additional costs as input tax. Note: if you also use the bike privately, there are different ways to handle the VAT.

 

As an Employer, is it Better to Buy or Lease a Bike?

As an employer, leasing a bike is generally a better option than buying one.

When buying a bike, you as an employer bear the full purchase costs and are responsible for maintenance. This means a higher initial investment and recurring costs for maintenance and repairs. Additionally, purchasing a bike involves other administrative burdens, such as keeping track of depreciation.

Leasing, on the other hand, offers more financial and administrative advantages.

 

Benefits of a Lease Bike

 

All-in Monthly Costs

You completely relieve yourself and your employee from investing in the purchase of a new bike. Additionally, all costs for the lease bike, such as maintenance, repairs, and insurance are included in the monthly lease amount.

Fiscally Attractive and Administratively Easy

Both employers and employees benefit from tax advantages, such as lower payroll tax and potential VAT benefits. Additionally, you don’t have to deal with additional administration, as the lease bike can be used for both office commutes and private use.

Sustainable Mobility Policy

Offering a lease bike fits within a sustainable mobility policy, which is good for both the environment and your company image.

Customized Lease Contract

Lease contracts can be tailored to the needs of both the employer and employee, with options for early return at the end of employment, for example. At the end of the lease contract, the leasing company handles the processing of the bike, including the residual value.

Freedom of Choice and Flexibility

From e-bikes and speed pedelecs to cargo bikes and racing bikes: when employees can choose a lease bike that suits them, they’re more likely to cycle more often, including for personal use.

Want to know what bike leasing at Cyclis can mean for your organization? Check out the options for employers or contact us, even if you only need a business bike temporarily.