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The tax benefits of bicycle leasing at a glance

Do you want to offer your employees bicycle leasing? Good idea! In this article, we list all the tax benefits for you. The basic idea behind leasing a bicycle is quite similar to leasing a car. However, in practice there are quite a few differences – and these are mainly due to the fiscal advantages.

Bicycle leasing, that’s fiscally advantageous

Bicycle leasing is not about one specific tax benefit. The government provides a diverse range of measures, so that companies can encourage their employees in many different ways to cycle to work more often. Here we go…

1. Benefit in kind

Let’s start with the Benefit in Kind (BiK). You do not pay BiK for the use of a company bicycle.

This tax exemption only applies when you use your company bicycle for commuting.
The exemption applies to any type of bicycle: from city bikes and folding bicycles to mountain bikes, speed pedelecs and racing bikes.
The same rule also applies when the bicycle is linked to a company car or in the context of the second pillar of the mobility budget.

This tax benefit is therefore interesting for the employee who uses the company bicycle to travel between home and work.

Attention: If you use your bicycle for private purposes only, then BiK does apply. The calculation is based on the actual value of the company bicycle.

2. Social security contributions

Did you know that the private use of company bicycles is no longer subject to social security contributions (NSSO) since 1 January 2017 – and this with retroactive effect? If you have a company bicycle and you use it for commuting, it is no longer considered a wage advantage. Consequence? You don’t pay social security contributions on the company bicycle. That’s a nice bonus!

It’s a different story if you only use your company bicycle for private journeys. In that case, the bicycle is considered a wage benefit and you pay classic social security contributions (patronal and employee). So everything depends on the commuting kilometres you travel.

3. Bicycle allowance

Your employer can pay a bicycle allowance for journeys you make with your company bicycle for commuting. And the good news? This compensation is exempt from taxes and NSSO contributions up to a maximum of 0.27 euros/kilometre (rate valid since January 2023).

From 1 July 2020, the situation will also change for employees covered by PC-200 (Joint Committee). You can read the details of this change in the article ‘All you need to know about the bicycle allowance’.

4. Tax-deductible costs

There is also good news for the employer in terms of taxation! If the employee uses the company bicycle for commuting or work-related journeys, the lease price of the bicycle is 100% tax-deductible. Other costs, such as furnishing a changing or shower room or a bicycle parking, are also 100% deductible. Let’s bring on those lease bikes!

5. Recovery of VAT

And what about VAT? The recovery of VAT is determined by the use of the bicycle:

The VAT is only deductible for the percentage that the bicycle is used for purely work-related journeys.
You cannot deduct the VAT for private trips or commuting by bicycle.
You cannot recover the VAT on the leasing costs of the leased bicycle, which you only use for commuting.

Do you want to see how you can offer tax-efficient bicycle leasing in your company? Schedule a meeting with o2o!

Source: Link2fleet