Joule spoke with Christophe, CEO of social secretariat Besox about mobility as a form of flexible compensation, with a focus on the company bicycle. You can watch the full conversation on our Youtube channel or listen to it on your favorite podcast platform. You can read the highlights here!
Current trends within flexible compensation
The high wage cost in Belgium means that employers need to think more about alternative and more advantageous ways of remuneration by supplementing wages with fringe benefits. Christophe agrees:
"We see that compensation in Belgium is becoming very expensive due to automatic indexation. As a result, there is increasing recourse to flexible compensation such as a cafeteria plan, mobility budget and company bicycles."
Two types of company bikes
A company bicycle is a bicycle that a company provides to its manager(s) or employees. The company bicycle can be used for:
- Commuting: for example, a bicycle for the employee charged through wages.
- Professional travel: for example, a cargo bike for transporting goods and services.
The benefits of a company bicycle
A company bike is a win-win for everyone:
- Financially beneficial for both employer and employee.
- Functional: Your employees avoid traffic jams and get to their locations quickly and efficiently.
- Good for the environment: fewer cars = less Co2 in the air.
- Healthy both physically and mentally.
"By biking to the office you exercise more. So you can eat up to 11 packs of fries more per year," Christophe laughs.
Why is a company bike so financially rewarding?
"The financial benefit of the company bike is one of the bigger drivers for choosing a company bike." Explains Christophe.
And rightly so, because a company bicycle is very interesting financially for both the employee and the employer.
- As an employee, you pay no IRS, income tax or benefit in kind (VAA).
- As an employer, you pay no employer contributions and enjoy a tax exemption that is 100% deductible.
"With a company bike, you can give the employee a higher take-home pay than with a gross pay raise"- adds Christophe.
Difference bicycle leasing and bicycle purchase
Those wishing to offer a company bicycle can choose to do so via bicycle leasing or bicycle purchase. So what is the difference?
- Bicycle leasing: you rent a bicycle, at a monthly lease cost, over a period of 36 months. This includes a service package with maintenance and repair.
- Bike purchase: you buy the bike at a one-time list price.
Two conditions for private use of company bicycle
A company bicycle may also be used for private purposes. This under two conditions:
- It's a bicycle.
- There is regular commuting: you use the bicycle (on average) at least once a week to go to work.
Now how do you prove to the IRS that your employee makes that regular commute?
Christophe offers a tip for this: "Add a statement on honor to the cycling policy or as an addendum to the employment contract where the employee certifies that they are making that commute. Also record the effective cycling days in a calendar as additional evidence."
How exactly do you set up such a cycling policy? You can read about that in this blog post.
How can you provide the company bike?
The employee and employer can freely choose how to offer the company bicycle. Still, there are some ground rules:
1. Free offer by employer.
For the employee, the pay situation remains the same. To this, of course, comes a bicycle (and possibly additional services). The employer pays the cost of the bicycle (leasing), which is exempt from employer contributions and 100% deductible.
Christophe: "With a free offer by the employer, the extra cost is for the employer, but it's a lesser cost than a gross wage increase because you pay no NSSO contribution and no withholding tax."
2. Gross Wage Swap
The employee exchanges a portion of gross salary for a bicycle (lease). Since, unlike cash, the company bicycle is untaxed, this provides significant savings.
3. Net Pay Exchange
The cost of the bicycle is deducted from the employer's take-home pay. The employer then experiences no financial impact. The employee, on the other hand, has no savings.
Christophe: "The net wage swap is used with barem salaries, because it keeps the gross wage protected. The advantage is that the purchase of the bicycle is spread over 36 months The disadvantage is that there is no parafiscal optimization."
Want a complete overview of all the options, along with a practical calculation example? Download our free cycling guide.
Bicycle policy: what should be in it?
"As with a car policy, for the company bicycle it is best to lay down some basic principles in the addendum to the employment contract or a bicycle policy," Christophe said.
Such as:
- information about the type of bicycle;
- own contribution or not (wage swap or available for free);
- duties of the employee ("good housekeeping," maintenance, stabling,...);
- rules about whether or not it is private use;
- employee liability ;
- What happens when the employment contract is suspended or terminated;
- statement on honor commuting;
- written agreement to withhold gross pay, net pay or exchange end-of-year bonus.
Bicycle allowance: mandatory from May 1, 2023
A bicycle allowance can be obtained both for use of your own bicycle and a company bicycle. The perfect way to reward and encourage employees to bike more to the office.
Christophe:
"As of May 1, all employees are entitled to a bicycle allowance of €0.27 per kilometer. However, all joint committees have the right to make an exception to this."
FAQs: frequently asked questions
Can you get a bike allowance if you already have a company car?
Yes, only for actual miles traveled by bicycle.
Can you combine a bicycle lease with a company car.
Yes, for example through salary swaps.
What happens to the lease bike if the employee changes jobs?
This is called "early termination of the lease," the agreements around this are set forth in the bicycle policy.
Can I have a bicycle lease with a baremaloon?
Yes, that can then be done through net wage exchange
