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Bikeleasing Company Bike Tax Guide

Definition of terms, prerequisite requirements & your benefits as an employee.

Private use & taxable benefit
0.25% rule with example calculation
Save taxes through salary conversion

Company bike leasing is in vogue because cycling is eco-friendly and healthy. It also makes the dream bike more affordable thanks to the leasing model and favorable tax regulations. But what about tax on my company bike if I also want to use it in my private life? What does the 0.25% rule imply? And how does the company bike enable me to save tax?

We answer frequently asked questions and provide an overview of the key terms related to the taxation of company bikes.

Basics of company bike taxation

Taxable Benefit – Why Do I Have to Pay Tax on My Company Bike?

The private use of a company vehicle is considered a taxable benefit and must be taxed accordingly. But what exactly does that mean? A taxable benefit refers to non-cash benefits provided by the employer to the employee—also known as benefits in kind. These are subject to taxation because the employee gains a financial advantage by not having to pay for these goods or services personally.

From the 1% Company Car Rule to the 0.25% Taxation for Company Bikes

This flat-rate taxation has applied to privately used company bicycles since a 2012 directive by the state finance ministries – marking the beginning of the success story of company bike leasing. But the real breakthrough came in 2020, when the taxable benefit for company bikes was further reduced: now, only 0.25% of the recommended retail price (RRP) is subject to tax.

Mann und Frau auf Diensträdern in Leipzig

Save Taxes Through Salary Conversion

When employees finance their company bike via salary conversion, they reduce both income tax and social security contributions—because the monthly lease payments are deducted directly from their gross salary. As a result, the actual net cost is significantly lower than the leasing rate, making the dream bike much more affordable. Want to know how much you can save? Our employee leasing calculator has the answer.

Tax-Free Company Bike – Here’s How

With salary conversion, employees benefit from tax and social security savings on their company bike lease. But it gets even better: if the employer covers all leasing costs in addition to the regular salary, the bike counts as a non-cash benefit—making it completely tax-free for the employee. And even if the employer doesn’t pay the full amount, company bike leasing is still worthwhile. Many employers at least contribute to the cost, making the model even more attractive.

Company bike vs. company car: Tax similarities and differences

Pursuant to the tax decree issued by the federal states in 2012, the tax rules that apply to the provision of a company bicycle are similar to those for a company car. However, there are differences.

Tax advantage for electric vehicles: 1% vs. 0.25% rule for company cars

The reduced tax on the monetary benefit depends on the way the company car is powered. While the 1% rule is applied to privately used company cars using a combustion engine, employees with electric company cars are taxed much more favorably: If certain conditions regarding the price and date of purchase are met, the 0.25% rule applies in this case. Instead of one percent, only a quarter of the list price is taxable as a monetary benefit each month, thus giving employees a real tax advantage.

Cargobikes und andere Diensträder profitieren von der 0,25%-Regel

The 0.25% rule: company bikes and electric company cars enjoy the same tax break

Whether it’s a classic bicycle, cargo bike or e-bike: Since 2020, company bikes enjoy the same tax breaks as do electric company cars. The only requirement is that the employee took over the bike as a company vehicle for the first time in 2019 or later. The 1% rule continues to apply to company bikes that were leased as a company bike before 2019.

Diensträder sind von der Besteuerung des Arbeitswegs ausgenommen

Company cars and company bikes differ in the way the commute is taxed

Anyone who regularly uses their company car to drive to work faces tax on the associated monetary benefit. For combustion cars, this is 0.03% of the gross list price per kilometer of the one-way journey per month, while it’s merely 0.0075% for electric cars. Company bike riders are clearly in the advantage, as their commute to work is not taxed at all. The only exceptions are S-pedelecs, i.e., e-bikes with pedal assistance reaching a speed of up to 45 km/h. Although the favorable 0.25% rule also applies to these speedsters if they are used as company bikes, the use for commuting to work is subject to tax just like a company car.

Tax, agreements, etc. – practical knowledge about company bikes

How exactly does the 0.25% rule work? How is my company bike taxed if I decide to keep it at the end of the lease term? And why do I need a Transfer Agreement? Find the answers below.

Sample computation: That’s how the 0.25% rule works

The monetary benefit provided in the form of a company bike is taxed according to the 0.25% rule. This rule stipulates that a small percentage of the gross list price of the bike is added to the employee’s taxable salary each month – namely 1% of the quarter of the RRP, rounded down to the nearest 100 euros. Does that sound confusing? Then take a look at our sample computation:

Manufacturer’s RRP: € 996.00

Divided by 4 = € 249.00 (one quarter of the RRP)

Rounded down to the nearest full € 100 amount = € 200.00

€ 200 Euro x 1% = € 2.00

This computation shows: If you use a company bike with a list price of € 996, merely € 2 per month counts as additional salary, which is subject to taxation and social security contributions.

When the lease expires: company bike tax if you decide to retain the bike

If you want to keep your company bike at the end of the lease term, you can usually do so. The amount due for the final payment depends on the price of the company bike. So, how is your leased bike taxed if you decide to retain it once the lease has expired? While the tax authorities assume a residual value of 40% of the RRP, you, as an employee, will usually be offered the bike at a takeover price of just 18% of the RRP. The difference between these two amounts is considered a monetary benefit. In this case, we at Bikeleasing-Service take care of the taxation, so that the transfer of the company bike remains tax-free for you as an employee.

Good to know:

For tax reasons, you will receive a binding purchase offer for your company bike shortly before the end of the lease term.

How to take over your leased bike

Leasing Calculator – See How a Company Bike Impacts Your Taxes

When leasing a company bike via salary conversion, the monthly lease payments are deducted directly from your gross salary. This reduces your taxable income and in turn, lowers your income tax and social security contributions. Want to know how your dream bike affects your tax and take-home pay? Our leasing calculator makes it easy to find out.

Go to leasing calculator

Prerequisite requirements for tax breaks

The Transfer Agreement

The tax advantages of company bike leasing only apply if the employer, rather than the employee, is the contractual partner of the leasing company and the employee is thus also the lessee. The terms and conditions under which the employer provides the leased bike to the employee are then set forth in a Lease Agreement. This supplements the existing employment contract and defines provisions such as the monthly salary conversion amount.

Employer page

Arbeitgeber bestimmt konkrete Bedingungen des Überlassungsvertrags

Good for you, your budget and the environment

Leave your car at home and ride a company bike from Bikeleasing-Service to reap a number of financial benefits:

Top bike at a top price – save up to 40 percent

Low net financial burden – thanks to salary conversion
Tax advantage – benefit from the 0.25% rule
Low-cost mobility anywhere, anytime – private use included
However, the tax break is only one of many advantages of company bike leasing through Bikeleasing-Service:
Say goodbye to hassle – commute without traffic jams or parking issues
Fit and healthy – through extra exercise
Peace of mind – thanks to our scalable insurance coverage
Clear conscience – ditch the car to reduce your CO₂ footprint

Is that what you’re looking for?
We are happy to show you the way to your company bike.

Yes, I want to switch to a company bike

Any questions? FAQs: company bike & taxes

For the private use of the company bike, a corresponding monetary benefit is added to the employee’s gross salary, which is subject to taxes and social security contributions. Since 2020, the 0.25% rule applies to the monetary benefit of company bike leasing. How the tax burden changes as a result of the company bike depends on various factors such as the tax class and the tax rate.

The conversion rate for company bike leasing is the amount deducted from the gross salary for salary conversion, thus reducing your taxable income and the associated social contributions. The monthly net cost – i.e., the difference you see in your salary account as an employee – is significantly lower. How much exactly? Use our lease calculator for employees to find out for yourself.

That depends: Bike leasing financed via salary conversion reduces the employee’s taxable gross salary, thus reducing tax and social security contributions. Private use of the company bike constitutes a taxable monetary benefit; however, the applicable tax rate is only 0.25% of the gross list price.

The situation is different for company bikes that are fully financed by the employer as a perk rather than via salary conversion. Since 2019, such bikes are completely tax-free to employees.

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