Tax

Tax authorities like bicycles

Businesses can opt to give their employees company bicycles instead of company cards. It is not just a nice extra for your employees but for you as well. Riding a bicycle is not only good for the environment and your health but also for your finances. The information below will, without a doubt, encourage you to take the bike to work.

Tax exempted social advantage

Before the 1st of January 2009 your employee (or you as employer) was taxed for all kinds of advantages related to the free use of a company bicycle. The Code of Income Tax clearly states that from 2009 onwards the use of a company bicycle is part of a tax exempted social advantage for the employee or business leader. It is, however, important that the bicycle is used for the actual journey to and from work. It is therefore very important that you drive the bicycle to and from work. It does not matter, however, whether you use that same bicycle for personal means outside work.

This exemption comes on top of the tax exempted bicycle remuneration

To encourage the use of bicycles even further, employers can award their employees or themselves with a tax-free remuneration of 0,20€ (amount is applicable from income year 2009 onwards) per actual kilometre driven to and from work. The remuneration that you pay yourself or your employee(s) is fully tax deductible. This is a tax-free remuneration for you or for them and it abundantly covers the cost of special clothes needed to drive a bicycle to and from work. It does not matter, however, whether you actually buy these special clothes or not, which doubles the advantage. You (or your employees) do not have to pay for the bicycle personally and on top of that you receive a tax free remuneration.

Tax deduction at 120%

The costs that you, as an employer, make to encourage the use of bicycles to and from work form part of a regulation of increased cost deduction at 120%. This generous regulation is applicable to all costs made for purchase, maintenance and repair of the bicycle(s) and accessories (helmet, ...) but also to the purchase or construction of a bicycle shed, changing rooms and showers. It is worth mentioning that the bicycles need to be depreciated on a straight line basis over 3 years.

Any bicycle

The law does not prescribe what type of bicycle you can offer your employees: city bike, racing bike or mountain bike ... take your pick. However, do not exaggerate because if your business buys an ultra sophisticated race bike worth €5.000 than your tax inspector will definitely want to have a word with you...

Example

This example proves that the regulation mentioned above is very appealing.

Information

Johan is an accountant and works through a private limited company of which he owns all shares. He offers his services to a medium sized accounting business 7 km from where he lives and within that business he has his own office. Johan’s New Year resolution for 2009 is to drive a bicycle to and from work every now and then. The puts words into actions and he buys a bicycle through his business on the first of March. The bicycle costs 999€ without VAT. Johan uses his bicycle around 50 times to go to and from his fixed position of employment. On top of that, his business pays him a bicycle remuneration of 0,20€ per actual driven kilometre to and from work.

Net cost for the business

Johan's advantage


(1) Acquisition cost of 999 € depreciated on a straight line basis over three years
(2) 7 km x 2 x 50 x 0,20 € per actual driven kilometre
(3) Bicycle can be depreciated at 120% of the purchase price; the deductible depreciation is calculated as follows: 333 € x 120/100
(4) 539,60 € x 33,99%
(5) 999,00 x 21% x 1/3 (VAT that you pay for personally)

Evidence?

In order to enjoy the privileges that come with this regulation you have to be able to prove that the bicycle has been used for driving to and from work at least occasionally. If your tax inspector is in doubt, than you could for example show him that there are company bicycles in your bicycle shed. Photos are very handy as well and you can always invite your tax inspector to drive to and from work on a sunny morning at 7AM...

You or your personnel already have a bicycle

In case you or your employees already own a bicycle personally you can still take advantage of the tax-free remuneration of 0,20€ per actual driven kilometre to and from work. This remuneration is fully tax deductible for the employer and should be mentioned on form 281.10 or 281.20. Apart from that you could sell your personal bicycle to the business since, after all, the law does not prescribe that the business has to purchase a new bicycle...