To encourage the use of bicycles for commuting, companies are able to fully deduct certain costs as professional expenses (Art. 64ter, paragraph 1, 3° CIR/WIB92 [Income Tax Code 1992] and Art. 190bis CIR/WIB92). These include costs for the purchase, maintenance and repair of bicycles, as well as the purchase, construction or remodelling of property for bicycle racks, locker rooms or sanitary facilities made available to staff or managers.
Bicycles include both conventional and electric bikes, racing bikes, mountain bikes, city bikes, cargo bikes, folding bikes, speed pedelecs, and adapted bikes for the disabled.
Before we list the various benefits, there are important points to consider:
- Company bicycles must actually be used for commuting.
- The company retains ownership of the bicycle.
- Invoices and underlying supporting documents must be kept for accounting purposes.
- The benefit is not taxable for the employee or company manager if the bicycle is actually (at least partly) used for commuting AND no actual professional costs are reported on the personal income tax return. Professional costs must be set as a flat rate.
- A bicycle allowance of 0.35 euros per kilometre may be paid out for the 2024 financial year, up to a maximum of 3,500 euros per year. This is exempt from social security and tax deductions.
- Both the company bicycle and accessories are 100% deductible professional expenses. The company bicycle is depreciated on a linear basis over a minimum of three years. Maintenance costs may be immediately recognised as costs within the accounting records.
VAT is not deductible if the bicycle is purely for commuting and private use. If the company bicycle is also used for business travel, then some VAT deduction is possible. Professional use can be demonstrated by specific, factual evidence.
Bicycle repairs are subject to a split VAT rate: 6% on labour and 21% on parts.
Starting in the 2024 financial year, the benefit of the company bicycle must be stated on the tax record. This new obligation applies to company bicycles purchased by the employer for commuting, as well as company bicycles provided via leasing in a cafeteria plan or flexible remuneration plan, and to shared bicycles under a contract in the employer’s name.
The benefit, which is mandatorily listed on record 281.10 (employee) and 281.20 (company manager), is exempt only if the company bicycle is used for commuting and if the employee/company manager opts for the flat-rate deduction of professional costs.
This new record requirement makes it easy for tax authorities to add the benefit to taxable income if it turns out that actual professional costs are being deducted on the personal income tax return. This applies from the 2024 financial year.
The ‘benefit’ listed on the tax record includes both the amount of the bicycle allowance and the benefit-in-kind of the company bicycle. This benefit-in-kind is determined based on actual value.
Determining this actual value is complex and may be open to discussion.
When determining the actual value, factors such as the type of bicycle, accompanying accessories and services such as insurance, maintenance and repairs must be considered. In addition, the availability of the bicycle to the user must also be considered, whether it is permanent or limited.
To determine the benefit-in-kind of a company bicycle, use the following methods:
• Leased bicycle: For a leased bicycle, you can assume the lease price includes VAT.
• Purchased bicycle: For a purchased bicycle, the benefit-in-kind is calculated based on the purchase price of the bicycle and accessories, spread over five years (the economic life of the bicycle). This includes the cost of the repair and maintenance agreement.
These are possible calculations and may vary depending on specific circumstances. The benefit to be reported on the tax record can be reported annually, monthly or quarterly.
If you have any questions, please feel free to contact our Accountancy & Tax Advisers.