Companybike and bike leasing in Germany explained

Cycling not only promotes health, but also protects the environment and the climate. More and more people are therefore switching to cycling for their commute to work. E-bikes have become particularly popular in recent years, although they are not that cheap. This is where bicycle leasing becomes interesting as an employee benefit. Since the beginning of 2019, employers have had the opportunity to provide their employees with a company bike tax-free through a bike lease. 


What is the company bike?

A company bike or job bike, is a bicycle provided by employers to their employees, usually through a bike lease. It is an attractive employee benefit that not only promotes employee mobility, but also has a positive impact on their health and the environment. These bicycles can be used for the daily commute to work, for business purposes and for private trips and offer a sustainable alternative to conventional means of transport.

The following options are available for the company bike from the employer:

  1. Companybike as a salary extra: The employer buys, rents or leases the bicycle or e-bike for his employees in addition to the salary. The exact distribution of costs between the employer and the employee is regulated in a transfer of use agreement. As a supplement to the salary, the company bicycle is completely tax-free for employees.
  2. Companybike via salary conversion: Employees rent or lease the bicycle or e-bike via salary conversion. The instalment to be paid is deducted directly from the gross salary. As with the salary, income tax and social security contributions are incurred here, but these are lower in comparison to the corresponding payroll.
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What is considered a company bike?

A company bicycle can be a bicycle, e-bike or (S-)pedelec. In principle, any bicycle can be acquired as a company bicycle via a bicycle lease.

However, different tax conditions apply to the different types of bicycles:

  • For conventional bicycles such as city bikes, racing bikes, mountain bikes or cargo bikes as well as e-bikes and pedelecs, there is no taxation of the non-cash benefit if the employer provides an employee with a company bicycle in addition to the salary owed anyway. In the case of company bicycles provided by way of salary conversion, the non-cash benefit is only taxable at 0.25% of the list price of the bicycle.‍
  • S-pedelecs can travel faster than 25 km/h and are thus classified as motor vehicles. They are therefore not allowed to be ridden on the cycle path, must have a licence plate and third party liability insurance under traffic law. S-pedelecs are treated like company cars for tax purposes. In terms of price, S-pedelecs are also more expensive than other bicycles, which makes them particularly interesting for employees in the case of bike leasing.

Currently, bicycles and especially electric bicycles (pedelecs, e-bikes) that go up to 25 km/h make up the largest share of bike leasing.

How does bike leasing work?

Bike leasing, is a straightforward process whereby employees can use a bicycle as a companybike via a leasing contract. This contract is for a specific period of time, usually between 36 and 48 months, and often includes insurance and maintenance in addition to the bike. Employers can provide the company bicycle to their employees in the form of a benefit in kind, in addition to salary, or in the form of salary conversion.

The salary conversion model is particularly popular. Bike leasing via salary conversion works as follows:

  • The employer concludes a framework agreement with a leasing provider, who handles the entire process, with a fixed term of usually three years. 
  • At the same time, the employer concludes a contract with the employee for the use of the bicycle for this period, which also allows private use. 
  • Thereafter, the salary is reduced by the leasing rate for the bicycle for the duration of the transfer of use.
  • The advantage: The taxable monetary benefit for the bicycle after the salary conversion is significantly lower than the salary waiver in the amount of the leasing rate. Example: Six euros for a bicycle with a list price of 2,500 euros (corresponds to the taxable 0.25%) versus 70 euros.
  • Accordingly, the gross taxable wage decreases.

At the end of the leasing contract, there is usually the option to buy the bike at a reduced price (this is called a transfer of ownership) or to return it and lease a new one. These comprehensive leasing packages often include insurance and maintenance, which minimises employees' worries about repairs and damage.

Is bike leasing worth it?

Bike leasing is worthwhile because it offers numerous advantages for both employees and companies. Company bikes are modern, climate-friendly and cost-efficient for employers as well as employees. The company bike is an attractive employee benefit.

Employees benefit from an attractive and healthy means of transport that improves their quality of life and reduces commuting costs. In turn, companies strengthen their employer brand, promote employee health and fulfil their sustainability and climate commitments at the same time.

How much does it cost to lease a bike?

The cost of leasing a bicycle varies depending on the model and the terms of the contract. The total cost depends on factors such as the length of the contract and the additional services chosen. However, it is important to note that these costs are often tax deductible, which further reduces the financial burden.

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Billing of company bikes

There are two ways for companies to settle the company bicycle:

  1. Settlement as payment in kind, in addition to salary
  2. Settlement as deferred compensation

As a salary conversion, the settlement of a companybike takes place via the monthly payroll. The corresponding amount is deducted directly from the employee's gross salary. This leads to tax benefits as the employees' taxable income is reduced.

In both cases, the companybike for the individual employees must be recorded in the payroll accounting. The following information must be recorded:

  • The amount of the benefit per month
  • The day on which the in-kind contribution was granted (= due date)

Companybike as a salary supplement

  • The employer rents, buys or leases the bicycle for its employees in addition to their salary.
  • As a salary extra, the companybike is completely tax-free for employees.
  • The assumption of costs and the contractual framework conditions for the company bike are regulated in a transfer of use.

Companybike as salary conversion

  • The employees lease the company bike in the form of deferred compensation.
  • This means that the monthly instalment is deducted directly from the gross salary. This reduces the income tax and social security contributions.
  • If employees also use the provided bicycle for private purposes, the company bicycle must be taxed as a non-cash benefit. The monthly taxable amount is 0.25% of the gross price of the bicycle.

What costs does the employer have with bike leasing?

Employers who offer bike leasing cover the costs of purchasing and leasing the bikes. Additional costs may be incurred for insurance and maintenance. However, these investments often pay off in terms of increased employee loyalty and motivation as well as positive environmental impacts.

Company bike taxation

The tax treatment depends on whether the company bike is given to the employee as a salary supplement or as a salary conversion.

  • If the employer bears the entire cost of the company bicycle and provides the employee with the bicycle in addition to his or her salary, the employee is exempt from wage tax and social security contributions. There is no taxation of the non-cash benefit.
  • With salary conversion, employees waive a small part of their monthly salary, which is converted into the leasing rate. Here, 0.25% of the list price (RRP), rounded down to a full 100 euros, is taxed monthly.
  • Employees may claim the full commuter allowance of 30 cents per kilometre to work and per working day for tax purposes.

In contrast to the company car, no further taxes are due for the kilometres travelled.

How much do you save on bike leasing?

The savings from bike leasing are significant. Employees save significant sums through tax benefits and lower maintenance costs. Employers benefit from increased productivity, lower sickness absence rates and a positive image as an environmentally conscious employer.

Employees can save up to 40% on bicycle leasing compared to direct purchase.

Who owns the bike after the lease?

The employer (lessee) concludes a leasing contract with the leasing company (lessor), the provider of the company bike leasing. This means that the company bike initially belongs to the employer, who gives the bicycle to the employee for the duration of the leasing contract.

Employees often have the option to buy the bike at a reduced price after the lease expires. Alternatively, it can be returned. The exact conditions vary depending on the contract and the provider.

Is it possible to lease a bicycle or e-bike privately?

Yes, private individuals also have the option of leasing bicycles privately. This offers the same tax advantages as company bike leasing and is an attractive option for anyone who wants to use a high-quality bike.

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Stefan Wendering
Stefan is a freelance author and editor at NAVIT. Previously, he worked for startups and in the mobility sphere. He is an expert in urban and sustainable mobility, employee benefits, and New Work. In addition to creating blog content, he also produces marketing materials, taglines, and website content, as well as case studies.
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