Bikeleasing Company Bike Tax Guide

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

Cycle to work and head to the countryside after work

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.

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

Tax on company bikes – the basics

Monetary benefit

Why do I have to pay tax on my company bike?

From the 1% company car rule to the 0.25% company bicycle tax

For anyone using their company car privately, the associated monetary benefit is subject to flat-rate taxation based on the 1% rule.

Salary conversion saves tax

But the 0.25% rule is not the only way to save tax through a company bike.

Tax-free company bike – this is how it works

Company bike leasing by way of salary conversion saves employees tax and social security contributions.

No matter if it's a company car or a company bike:

The private use of a company vehicle constitutes a monetary benefit that is subject to taxation. But what does that mean in practice? In this context, a monetary benefit is a benefit, provided by the employer to the employee, that is not paid in cash – known as a benefit in kind. Such benefits are subject to taxation because the employee benefits financially from the fact that they do not have to finance these benefits in kind themselves.

For company cars, 1% of the list price is added to the monthly taxable salary.

Pursuant to a decree issued by the state finance ministries in 2012, the same flat rate applies to privately used company bicycles. This decision marks the kickoff to the success of the company bike leasing model – but it is far from its peak, because since 2020, the monetary benefit of company bicycles has been taxable at 0.25% of the RRP.

By financing your company bike through salary conversion ...

... you reduce your income tax as well as your social security contributions because the monthly lease payments are taken directly out of your gross pay. The actual net cost to you is therefore significantly lower than the monthly lease payment, making your dream bike particularly affordable for you as an employee. Use our lease calculator for employees to find out exactly how much you can save.

However, company bikes are only completely tax-free in one special case:

The employer bears all costs for the company bike, in addition to the salary paid. In this case, the company bike is considered a free perk which is tax-free for employees. However, even if the employer does not cover all the costs, the company bike leasing model is still worthwhile, particularly because many employers will subsidize the company bike rather than financing it fully.

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.

Elektroauto an Ladestation
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.

Radhändler berät Kundin

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.

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
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  • However, the tax break is only one of many advantages of company bike leasing through Bikeleasing-Service:
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  • 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
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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
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Any questions? FAQs: company bike & taxes

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