What you need to know about Joule's cost calculator
Calculating the true impact to your wallet of a company bike you finance via gross salary swap is no easy task. While many advisors take a short cut, our ambition at Joule is to perfectly enable you, the employee, to make an informed choice about the leasing bike of your dreams. Lots of factors come into play here, and our calculator takes them into account. We list the most important legal sources and factors.
The cost of bicycle leasing
You can use the Joule calculator to calculate the cost of your bicycle leasing.
Please note: bicycle leasing depends on a number of personal and company-specific factors (number of dependent children, marital status, etc.), which means that the calculation may differ from the final amount to be paid. For a specific calculation, we advise you to go through your social secretariat. Nevertheless, our calculator will already take into account some factors that will have more clarity about your bicycle leasing.
What legal rules affect your pay and benefits?
The rules that apply to your salary are influenced at several levels. For example, there are national legal provisions, such as Royal Decrees, which, among other things, draw out the differences between public and private sectors and play a role in terms of income tax. Just think of the income tax brackets.
In addition, the National Social Security Administration and the tax administration may issue guidelines.
In addition, however, there are numerous sectoral agreements (collective bargaining agreements) that only have an effect within the joint committee to which you, as an employee, belong. Think of money matters such as minimum wages, premiums such as the end-of-year bonus, transport costs, but also labor regulations that you only find in specific sectors. The largest joint committee in Belgium is the General Supplementary Joint Committee No. 200 for white-collar workers (PC200). In the Joule calculator you can currently choose from 7 joint committees. Is your joint committee not among the options? No worries, make a simulation based on PC200 (white-collar workers) or PC100 (blue-collar workers) and you will approach your real situation. Your employer or social secretariat can help you with an exact calculation.
Finally, your pay and benefits are largely driven by your employer. Just think about the amount of your salary, bicycle allowance and home office allowance.
When introducing a bicycle into your pay package, all of the above actors affect the net impact of that bicycle for you personally.
What are the principles in introducing a company bicycle?
A bicycle provided to you by your employer is completely exempt from social security contributions and income tax in Belgium, if you regularly ride it to work.
Such a bicycle can be financed in various ways. Where this is not ruled out at sector or company level (for example, because you are paid on barem wages), you can, for example, exchange part of your salary to pay for your bicycle. If you choose to finance the bicycle through your gross pay, your employer may not take any financial advantage. This means that the total annual wage cost for your employer may not decrease after the introduction of the company bicycle. For that total annual wage cost, we look at all expenses your employer incurs in connection with employing you as an employee, so not only your gross salary, but also employer contributions, vacation pay, work accident insurance, etc.
In practice, that rule means that all savings for your employer through tax and parafiscal exemptions must flow back to you.
What factors are involved in the Joule Calculator?
Patron contributions
You don't see these on your pay slip but on your pay your employer pays employer social security contributions. In PC200, these amount to 25% of gross pay (or more precisely, 25% of gross pay including the end-of-year bonus). When you contribute part of your gross salary to finance your bicycle, your employer will in principle pay less social security contributions. That benefit is returned to the employee using the following formula:
(12 x monthly lease price) / (13 x 1 + NSSO percentage employer + 0.92)
The result must be deducted from your gross salary, and so it will be less than the monthly lease price paid by the employer to the bicycle leasing partner.
Social security contributions and special contribution employee
You also pay social security contributions as an employee, and you'll see this on your paycheck as well. Usually this is 13.07% of your gross pay. As described above, you do not pay social security contributions on the bicycle portion within your pay package. Therefore, you will take a second benefit. After deducting your social security contributions, you will arrive at your taxable wages.
More info on social security contributions can be found here.
In addition to the regular social security contribution, you usually pay a special contribution as an employee. This too can be affected by gross pay exchanges, and is part of the Joule cost calculator.
Taxable wages and withholding taxes
The result of the previous calculations is the taxable wage. And from that taxable wage withholding tax is deducted. The withholding tax is an advance deduction from your income tax, which is regularized the following year. The tax depends, among other things, on your marital status and number of dependent children and is also calculated progressively. That means the higher your taxable annual income, the higher your tax rate. As described above, you do not pay withholding taxes on the bicycle portion within your pay package. Therefore, you will take a third-party benefit. After deducting your withholding taxes, you will arrive at your net pay.
It may well be, then, that you happen to be in a lower tax bracket because of your gross pay swap, and therefore have more net pay remaining than the previous year. This parameter is also included in the Joule cost calculator.
Social rights, year-end bonus and double vacation pay
As your gross monthly salary is reduced, you will also accumulate fewer social rights. The impact of gross pay swaps on your pension is difficult to estimate because your pension depends on several parameters that are not known until you start your pension (e.g., number of years of employment).
What is directly affected, however, are your year-end bonus (if applicable) and your double vacation pay. These allowances are in fact a function of your gross salary. Here too, there is a chance that you will end up in a lower tax bracket as a result of the reduction, and that you will therefore have more net left over from your end-of-year bonus and double vacation pay than was previously the case. This parameter is also incorporated into the Joule cost calculator.
Workers' compensation insurance, group insurance and other expenses
Also on these costs, the employer can in principle benefit from a gross salary exchange, and this benefit should also in principle be returned to the employee. We do not include this hatch in the Joule cost calculator since as an employee you often have no visibility into this.
Work bonus
Since January 1, 2000, lower wages have been subject to a reduction in social security contributions along employee lines called a work bonus. The work bonus ensures that with a lower wage, you are left with proportionately more net pay. If your wages fall below a certain threshold due to the application of gross wage exchange, your work bonus may increase, or you may receive a work bonus for the first time. In that case, you again benefit from bicycle leasing.
Learn more about the work bonus here.
Structural reduction
The structural reduction is a measure designed to reduce labor costs through a reduction in employer contributions. The aim of this measure is to boost employment by making it cheaper for companies to hire and keep staff.
The operation of the structural reduction is based on several parameters, including the size of the company (number of employees), the wage level of the employees, and sometimes the industry in which the company operates. The reduction is calculated per employee and is typically larger for lower-wage employees, making it a progressive system, which again can lead to an additional benefit in gross-wage exchanges.
This parameter is also part of the Joule cost calculator.
More info on the structural reduction can be found here.
Then what if I use a premium or bonus to finance my bike lease?
Again, the above principles often come into play, but not always. In the Joule cost calculator, we observe them.
For more information on how bicycle leasing affects your take-home pay, we recommend you contact your employer or social secretary.
Calculate the cost of your bicycle leasing!
You can use this method to calculate the cost of bicycle leasing. For more information about an exact calculation, please contact your social secretariat or your HR department!
