Renting and stashing away work bicycles: an overview of the bike-as-a-service model
In Germany, the trend of using company bicycles for commuting has gained significant traction, particularly due to the tax benefits associated with bicycle leasing (Dienstrad-Leasing). This scheme allows employees to lease bikes via salary conversion (Gehaltsumwandlung), resulting in tax and social security savings.
Salary conversion is the key to this tax-efficient system. Employees pay for the bike through payroll deductions from their gross salary, reducing their taxable income and social security contributions.
The benefit-in-kind (BIK) taxation is another significant advantage. Only 0.25% of the bike’s gross list price per month is added as taxable income, which is a favorable tax rate compared to traditional vehicle benefits[1][5]. Any employer subsidies or contributions towards the bike leasing scheme are tax-free for employees, further enhancing the tax advantage[1].
The versatility of company bicycles is another attractive feature. They can be used for both commuting and private purposes.
Employers also benefit from relatively low administrative costs due to the involvement of third-party leasing providers managing the program[1][5].
Additional incentives for e-bikes are also in place. Legislative incentives in Germany favor e-bikes through tax breaks and accelerating depreciation for employers, indirectly benefiting employees when companies promote e-bike leasing[3].
However, it's important to note that those who use S-pedelecs and faster e-bikes for business purposes as self-employed individuals must pay tax on the private use at a rate of 0.25% of the list price per month - plus 0.0075% per kilometer of the distance to the workplace[2].
For classic bicycles and pedelecs with pedal assistance up to 25 km/h, the non-cash benefit remains tax-free until the end of 2030[4].
To retain the tax advantage of the company bike leasing, the subsequent purchase of the bicycle should not be contractually agreed in advance.
The purchase price after leasing a company bicycle is worth 40% of its original new price after three years according to the tax office[6].
Many leasing providers offer all-inclusive tariffs that cover maintenance, UVV inspection (if necessary), and insurance for Pedelecs[7].
The market for company bicycle leasing is large and continues to grow, with main providers including Jobrad, Eurorad, BusinessBike, Lease-A-Bike, Mein-Dienstrad.de, Deutsche Dienstrad, Bikeleasing.de, and Company Bike[8].
For those who acquire a bicycle with a net value of more than 800 euros, they usually depreciate it over seven years[9].
Remember, it's crucial to document the business character of the bicycle to avoid any potential issues[2]. Those who are unsure about the extent to which the bicycle is used for business purposes can keep a logbook - at least in the first year[2].
For S-Pedelecs and E-Bikes, an annual expert inspection is obligatory (§ 57 DGUV Regulation 70), and they must be equipped with a rear-view mirror, license plate, and operating permit[6].
In summary, the most common and attractive tax advantage is the reduction of taxable income through salary conversion combined with a low BIK taxation rate of 0.25%, making company bicycle leasing a very tax-efficient employee benefit in Germany[1][3][5].
[1] https://www.bikeleasing.de/unternehmen/bike-leasing/ [2] https://www.bike-leasing.de/bike-leasing/privat-gebrauch/ [3] https://www.bikeleasing.de/unternehmen/e-bike-leasing/ [4] https://www.bike-leasing.de/bike-leasing/pedelec-leasing/ [5] https://www.eurorad.de/unternehmen/dienstrad-leasing/ [6] https://www.jobrad.de/unternehmen/dienstrad-leasing/ [7] https://www.businessbike.de/unternehmen/dienstrad-leasing/ [8] https://www.lease-a-bike.de/unternehmen/dienstrad-leasing/ [9] https://www.mein-dienstrad.de/unternehmen/dienstrad-leasing/
- One can adopt a more environmentally-friendly lifestyle by leasing a company bicycle for commuting in Germany, as it offers tax benefits and savings through salary conversion and low benefit-in-kind (BIK) taxation.
- Fashion-and-beauty and home-and-garden enthusiasts can reduce their carbon footprint by choosing eco-friendly products, while food-and-drink lovers can do so by supporting local, organic farms and businesses.
- One can combine travel and sports by choosing cycling as a mode of transportation during vacations or outdoor adventures, promoting a healthier lifestyle and reducing the environmental impact.
