Biking isn’t just a green and healthy way to commute—it’s also a savvy way to score tax benefits! Current laws on bike allowances and company bikes offer great perks for both companies and employees. But, heads up! There are a few new administrative details to keep in mind. Let’s break down the key points and latest updates.
Bike allowance & company bike: Double the benefits
Opting to bike for your commute can bring two significant tax and social security benefits:
- Bicycle allowance: This mileage allowance for commuting by bike is tax-free under certain conditions, providing a nice perk for employees and business owners who regularly bike to work. Read our blog post "Bicycle allowance: this you need to know"!
- Company bicycles: Employers can provide employees with a company bike, either by purchase or lease, without it being counted as a taxable benefit—as long as the bike is used for commuting.
The best part? These two perks can be combined! You heard that right—both can be applied at the same time. For employers, costs to encourage bike commuting are tax-deductible: 120% in personal income tax and 100% in corporate tax. And in some cases, employers can even claim a tax credit.
Flat-rate professional expenses: What’s changing in 2024?
Since 2024, the tax exemption for bike benefits only applies to taxpayers who choose the standard professional expense deduction on their tax return. This comes with more detailed administrative processing of bike benefits to enhance transparency.
If you choose the actual expenses deduction, you’re excluded from these benefits. For these individuals, both the bike allowance and company bike benefits count as taxable income at a progressive rate—but that’s only a small portion of employees.
From the 2024 income year on, the choice for standard expenses will be directly checked in personal income tax, no longer in payroll withholding. This means no payroll withholding is due on bike allowances or the company bike benefit, as long as the employee meets the conditions.
Tax forms: Stay ahead of the game
Starting in 2024, the full amounts for both the bike allowance and the company bike benefit must be reported on tax forms 281.10 (for employees) and 281.20 (for business owners). This allows the tax authorities to include these benefits in taxable income for those who choose the actual professional expense deduction on their tax return.
However, this requirement also applies to those who select the standard expense deduction, as the choice is only made in the year following the income year.
For income year 2024 , use pay code 6841 "inform. value company bicycle" for this purpose.
As a result, whenever a company bike is provided free of charge, the employer must determine the value of the benefit based on its actual value.
Here’s what to consider:
- The type of offer: is only a bike provided, or are accessories included as well?
- The extent of the offer: the valuation will vary depending on whether the employee has permanent access to the bike or only limited access. In the first case, the benefit should generally be determined on an annual basis. In the second case, the frequency and duration of use should be considered when calculating the benefit.
- The value of the offer: the benefit will naturally vary based on the value of the bike and any accessories. The cost of any additional services provided will also play a role.
Refer to ‘circular 2024/C/22’ for more details and examples.
Example 1
An employer purchases an electric bike and provides it permanently to an employee (value: €3,000), along with accessories (value: €500). The employer also covers repair and maintenance costs (€80 per year). The employee has access to the bike at home year-round.
The benefit can be calculated based on the bike's purchase price and accessories spread over 5 years, which is the economic lifespan of the bike, with repair and maintenance costs added.
Benefit = (€3,000 + €500 = €3,500) / 5 = €700 per year.
Maintenance and repair contract (€80 per year). Total = €780.
If the bike is provided from 01.07.2024, the benefit amount is allocated as follows:
Tax year 2025 (income 2024): 780 x 184/366 = €392.13.
Tax year 2026 (income 2025) and onwards: €780.
Source: Circular 2024/C/22 dated March 28, 2024.
Example 2
An employer purchases an electric bike and provides it permanently to an employee (value: €3,000), along with accessories (value: €500). The employer also covers repair, maintenance, and insurance costs so that the employee bears no expenses. The employee has access to the bike at home year-round.
The benefit may be considered equivalent to the lease the employer would have paid if a comparable leasing agreement had been in place.
Source: Circular 2024/C/22 dated March 28, 2024.
What about leasing a company bike?
A leased bike is treated as a company bike for tax purposes. The benefit value of a leased bike is simple to calculate: it’s the total lease price including VAT that the employer paid for that year.
Here’s an example calculation for a leased company bike:
Lease price = € 150 incl. VAT per month
Bike was put into service on 22/07/2024 (start date 01/08/2024)
- Amount on form 281.10 for 2024 = 5 months x €150 = €750
- Amount on form 281.10 for 2025 = 12 months x €150 = €1,800
- Amount on form 281.10 for 2026 = 12 months x €100 = €1,800
- Amount on form 281.10 for 2027 = 7 months x €150 = €1,050
Here’s a quick guide to bike commuting benefits
Need more info? Check in with your payroll advisor or social security office.
Maximize the perks of bike leasing
Bikes are still a powerful tool in the sustainable mobility game, backed by a range of tax perks. Whether you’re an employee biking your daily commute or an employer encouraging your team to travel greener and healthier, understanding the rules lets you make the most of these awesome benefits.
So, ride into these perks and give your team a boost of energy!
Want to get started with bike leasing? Contact us and we'll figure it out together!
