Non-Cash Benefit for Company Cars, Company Bikes, and Mobility Budgets

The trend is shifting towards more flexibility and sustainability: the significance of the company car as a status symbol and sought-after employee benefit is decreasing. Instead, company bikes and mobility budgets are becoming increasingly popular. Employers who want to offer these modern benefits to their employees must also consider tax regulations. Like company cars, a non-cash benefit arises when the company bike or mobility budget is used privately by employees. However, both companies and employees can take advantage of numerous tax benefits.

‍

We summarize the key points and explain how companies can use bike leasing and mobility budgets to leverage tax benefits.

‍

Protecting the Environment and Saving Taxes: Company Bikes and E-Bikes Benefit from the 0.25% Rule Like Electric Company Cars

Do you want to provide your employees with a company bike that they can use in their leisure time? Like company cars, the private use of a company bike must be taxed as a non-cash benefit. Company bikes and e-bikes enjoy the same tax advantages as electric company cars.

‍

Non-Cash Benefit and the 0.25% or 1% Rule for Taxation of Company Cars

The private use of a company car is considered a non-cash benefit, which employers and employees must tax. For company cars with internal combustion engines, the 1-percent rule—known as the company car privilege—is applied in addition to the mileage log method. This means that one percent of the vehicle's list price is added to the employee's salary as additional income each month, subject to both taxes and social security contributions.

‍

For employees driving an electric company car, the 0.25-percent rule, also known as the quarter rule, applies. Instead of one percent, only 0.25 percent of the vehicle's list price is considered a non-cash benefit each month. This provides a further tax advantage compared to traditional company cars.

‍

Tax Benefit Also Applies to Company Bikes

This tax relief also benefits company bikes. Since 2020, the 0.25-percent rule has applied to the private use of company bikes and e-bikes. Employees can also tax S-pedelecs at 0.25 percent if they use them as job bikes. Company bike riders even have a tax advantage over company car drivers: unlike with company cars, they do not have to tax their commute in the payroll.

‍

Utilizing Tax Benefits: Bike Leasing Through Salary Sacrifice or as a Salary Extra

Employers have two options for providing their employees with a bicycle or e-bike as a company bike. Companies can offer bike leasing with tax benefits either through salary sacrifice or as a salary extra.

‍

In bike leasing via salary sacrifice, employees pay the monthly leasing rates from their gross salary through salary conversion. Since 2020, employees only need to tax the non-cash benefit for the private use of the company bike at 0.25 percent of the gross list price (0.25-percent rule).

‍

Besides bike leasing via salary sacrifice, employers can offer the company bike as a salary extra. The employer covers the full cost of the bike leasing and provides the bicycle or e-bike to the employee in addition to their salary. Since employees do not incur any costs here, they do not have to tax the non-cash benefit for private use in this case (tax exemption).

‍

Bike Leasing Protects the Environment and Saves Money

Those who leave their car and travel by bike instead protect the environment and improve their health. Employers can support their employees with bike leasing. Employees benefit financially in several ways:

‍

• Employees can save up to 40 percent compared to private purchases
• Enables access to high-quality bicycles and e-bikes at discounted prices
• Net salary optimization through salary conversion
• Employees benefit from the 0.25-percent rule
• Bike leasing offers usually include insurance coverage

‍

Non-Cash Benefit of Mobility Budget: Taxation Depends on Means of Transport

A mobility budget also constitutes a non-cash benefit when used privately, making it subject to tax and social security contributions. Whether employees ultimately need to tax the mobility budget depends on the means of transport used. Some environmentally friendly transport means are tax-exempt or tax-advantaged, including public transportation (ÖPNV), company bikes, e-bikes, and electric vehicles with low CO2 emissions.

‍

If employees use the mobility budget for other means of transport like cars, motorcycles, or scooters, they can apply a flat tax. This involves a flat tax based on the list price and the vehicle's CO2 emissions. If employees use a company car as part of the mobility budget, the aforementioned tax rules for company cars (1-percent or 0.25-percent rule) apply.

‍