Company bikes will become more attractive in 2020

A company bike is arranged simply from a tax perspective: if you, as an employer, make a bicycle available, a fixed addition of 7% of the recommended retail price (including VAT) applies per year. This addition is included in the employee's taxable wage and replaces the old, cumbersome mileage log. As a result, a company bike has become an attractive and accessible employment benefit. In this article, you will read how the scheme works, what you, as an entrepreneur, need to pay attention to, and what choices you can make.

How does the tax addition for a company bicycle work?

If you make a bicycle available to an employee, the Tax and Customs Administration generally assumes that the bicycle is also used privately. For this private use, a flat-rate addition of 7% of the bicycle's recommended retail price, including VAT, applies. This amount is added annually to the employee's salary, on which payroll tax is calculated.

For example: if the bicycle costs €2,000 according to the recommended retail price, the taxable benefit amounts to 7% × €2,000 = €140 per year. For an employee with an average tax rate of around 37%, this comes down to just over €50 net per year. This makes a company bicycle tax-advantageous for most employees.

The major benefit lies in the simplicity. Under the old regulations, an employee had to accurately keep track of the distinction between private and business mileage and allocate costs accordingly. That administrative burden has been eliminated: with the flat-rate addition, mileage registration is no longer required.

Please note: commuting counts as private use for a bicycle

An important difference compared to a company car: for a bicycle, commuting is considered private use. The 7% addition therefore also covers cycling from home to the office. If you make a bicycle available for commuting, the employee can, in principle, no longer receive a tax-free travel allowance. Weigh this up on a case-by-case basis, as the travel allowance may actually turn out to be more advantageous for those who cover many kilometers.

Change in 2026: sometimes no additional tax liability anymore

As of 2026, the regulation has been clarified on an important point. Until then, the flat-rate addition also applied when the bicycle was essentially used only for commuting and was rarely kept at home. Since then, the rule applies: if the employee does not park the bicycle at the home or residence address, or only parks it incidentally (in practice, a maximum of about 10%), then no addition needs to be applied.

This exception is particularly relevant if the bicycle remains parked on company premises or at a designated storage facility, for example. However, the burden of proof rests entirely with you as the employer: you must be able to demonstrate that the bicycle is hardly ever parked at home. Therefore, document this clearly, for example in a written usage agreement. If you are unsure whether your situation falls under this exception, have it assessed before waiving the taxable benefit.

Employee's own bicycle: different rules

If an employee uses their own bicycle, the tax addition does not apply. In that case, under the usual conditions, you may provide a tax-free mileage allowance for business trips and commuting, which covers travel expenses.

In addition, if you reimburse the purchase, maintenance, or insurance of an employee's private bicycle, that reimbursement is in principle taxable wage. However, you may designate such a reimbursement within the tax-free allowance of the Work-related Costs Scheme (WKR) so that no tax is levied on the employee. In doing so, keep an eye on the limits of the tax-free allowance.

Leasing a bike through the company: points of attention for employers

Many employers opt for a bicycle lease plan. The advantage of this is that, with sufficient participation, you can often more favorable terms with suppliers, maintenance companies, and insurers. A company bike also fits well into a broader mobility package, alongside, for example, a public transport subscription or a company car.

By including the bicycle in the terms of employment, you make the scheme accessible to all staff. Clearly document the agreements, for example in the employment contract or the employee handbook. Consider the following:

• VAT deduction: the deduction of VAT on a company bicycle is limited in many cases. Discuss this with your accountant or tax advisor.
• Maintenance and repair: agree on who is responsible and preferably have maintenance carried out by a specialist.
• Insurance and theft: specify who is insured and what happens in the event of theft or damage, including any obligation to lock the bicycle properly.
• Termination of employment: arrange what happens to a leased bicycle when the employee leaves the company.

Good agreements prevent disputes afterwards. Do you want to be sure that your bicycle scheme is legally sound in the employment terms and conditions? Our employment law can assist you with this.

Frequently asked questions about the company bike

How much is the taxable benefit for a company bicycle?

The taxable benefit is 7% of the bicycle's recommended retail price (including VAT) per year. That amount is added to the employee's taxable wage; payroll tax is calculated on this amount.

Does the employee still need to keep track of mileage?

No. Due to the flat-rate addition, mileage registration for a company bicycle is no longer required. This makes the scheme administratively simple.

Can an employee receive a travel allowance in addition to the company bicycle?

In principle, no tax-free travel allowance may be granted for trips made by the employee using the company bicycle (including commuting). For other means of transport or uncovered trips, this may sometimes be possible; have this assessed on a case-by-case basis.

Does the tax addition also apply to a second company bicycle?

Yes. If you make multiple bicycles available to an employee, the 7% addition to taxable income generally applies to each bicycle individually.

Is a company bike beneficial for the employer?

A company bicycle is an attractive, relatively inexpensive employment benefit that contributes to sustainable mobility and health. Whether it is fiscally optimal depends on the situation, the mobility package, and your company's VAT position.

Want to arrange a company bike legally?

Would you like to offer a company bicycle or a bicycle lease plan and legally formalize this in your employment terms and conditions? MKB Juristen drafts the necessary documents for you and advises on the terms and conditions, such as the employment contract and associated regulations. Schedule a no-obligation intake and we will work with you.