Why does leasing a bicycle through your employer offer so many tax benefits?

The lease bicycle is among the most popular fringe benefits among employees. For instance, it is in the top five most chosen options within the cafeteria plan. And that is not surprising, because the lease bicycle is the solution to your traffic problems and is also fiscally advantageous if you lease it through your employer.  But how exactly does this work? Find out below!

1. Not a benefit in kind

Let's start with the benefit in kind (BIK). With a company car, this is standard practice and you pay at least 1,000 euros a year for it, but for the use of your lease bicycle, you do not pay any BIK. So while the company car is increasingly taxed, with your lease bicycle you don't have to pay any taxes. And this therefore makes it very advantageous for you as an employee!

The only condition set by the government is that you cycle to work on a regular basis. How often that is can be found in your employer's cycling policy. Usually that comes down to once a week.

• 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 coupled to a company car or under the second pillar of the mobility budget.

Please note: If you ride your bicycle exclusively for private use, BIK rules do apply. This is calculated according to the bike's actual value.

2. No social security contributions required

Did you know that, since 1 January 2017, the private use of company bicycles is no longer subject to social security contributions – and this with retroactive effect? Therefore, if you lease a bike through your employer and use it for commuting, this is not counted as a wage benefit. As a result? You pay no social security contributions on the lease bicycle.

However, if you lease a bicycle through your employer exclusively for private use, that’s a different story. In that case, the bicycle is considered a wage benefit, meaning you are liable for the usual social security contributions. So it all relies on you commuting. Quite the incentive, right?

3. The bicycle allowance

Your employer can pay a mileage allowance for commutes on your lease bicycle. And the good news? This allowance is tax and social security contribution exempt up to a maximum of €0.27/kilometre (applicable rate since January 2023). This means you basically pay off the cost of your lease bicycle in just a few years.

Since May 2023, every employer is even required to pay a bicycle allowance to employees who regularly cycle to work. For more information, read our blog post ‘All you need to know about the bicycle allowance’.

4. Gross salary exchange or end-of-year bonus

Does your employer provide the option of leasing a bicycle via gross salary exchange or end-of-year bonus? Then you pay on average 40% less than if you bought the bicycle yourself. On top of that, you also won't have to shell out a huge amount in one go to get your favorite bicycle. Thanks to the monthly three or four-year lease formula, you will simply be exchanging a small amount of your gross salary each month.

Another benefit to this gross pay formula? As an employee, you have a greater budget for a more expensive lease bicycle (e.g. a speed pedelec) than if you were to purchase one yourself using your net salary.

So you see, all these tax benefits make leasing a bicycle through your employer a shrewd move financially for you as an employee. So, time to start thinking about your new (lease) bike!