Salary conversion allows employers in Germany to provide employees with company bikes or cars for private use by converting part of their gross salary into a non-cash benefit. This offers tax advantages but requires careful attention to specific legal and tax regulations.
Here’s how salary conversion works for bikes and company cars - and what employers should consider for smooth implementation.
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Environmentally friendly and health-promoting commuting options are becoming increasingly popular, making bike leasing through salary conversion more relevant than ever. It’s an attractive model for both employees and employers - offering financial benefits on both sides.
In short: a small portion of the employee’s gross salary is converted into a monthly leasing rate. The bike or e-bike is taxed monthly at 0.25% of the total price as a non-cash benefit.
This means the taxable benefit for a company bike equals 0.25% of the rounded retail price of the bike.
Taxable benefit: Private use of the company bike is taxed at 0.25% of the gross list price per month.
Tax exemption for additional benefits: If the bike is provided in addition to the employee’s regular salary (and not through conversion), the benefit remains tax-free.
Contractual agreement: The salary conversion must be documented in writing, ideally through a separate leasing or usage agreement.
Social security: The taxable benefit is subject to social security contributions since it counts as part of regular earnings.
Employers can also cover additional costs or offer subsidies to increase employee savings.
Employees give up part of their gross salary in exchange for a company car they can use for both business and private purposes. The process typically runs through a full-service leasing contract.
Taxable benefit: Private use is taxed at a flat rate:
1% of the gross list price per month for private use.
An additional 0.03% of the list price per kilometer between home and workplace.
For electric cars with a list price up to €70,000, the benefit is reduced to 0.25%.
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Use surveys or feedback sessions to understand employees’ mobility needs.
Compare bike and car leasing providers carefully - conditions, services, and administrative effort can vary widely.
Define clear terms for salary conversion and vehicle use to avoid future misunderstandings or conflicts.
Inform employees transparently and early about new mobility benefits and highlight their advantages.
Platforms like NAVIT allow seamless integration of new mobility benefits into existing HR and payroll systems.
By introducing company bike or car leasing through salary conversion, employers offer employees flexible and tax-efficient mobility benefits. This not only boosts satisfaction and retention but also strengthens the company’s image as a modern, sustainable employer.
What is salary conversion for a bike?
Salary conversion for bike leasing means part of an employee’s gross salary is converted into a non-cash benefit - the company bike. The employee gives up a portion of their gross pay, which directly covers the leasing rate. This reduces taxable income and can result in significant tax savings.
How does the 0.25% rule work for bikes?
Since January 1, 2020, the so-called 0.25% rule applies to privately used leased bikes. Employees pay tax on 0.25% of the gross list price each month as a taxable benefit.
Example: A bike with a list price of €3,000 results in a taxable benefit of €7 per month.
How is the leasing rate deducted from the salary?
The leasing rate is deducted directly from the gross salary before taxes and social contributions are calculated. This lowers taxable income and can reduce the overall tax and contribution burden. The exact savings depend on the individual’s tax rate.
Which bikes qualify for salary conversion?
In principle, all types of bikes can be leased: city bikes, trekking bikes, mountain bikes, racing bikes, cargo bikes, recumbents, and e-bikes (up to 25 km/h).
S-pedelecs (up to 45 km/h) are classified as motor vehicles and subject to different rules. Eligibility depends on the employer’s internal policy.
Can multiple bikes be leased through salary conversion?
Yes, it’s generally possible to lease multiple bikes via salary conversion - for example, for family members. However, it depends on the employer’s agreement with the leasing provider and the tax implications of each case.
Disclaimer
NAVIT assumes no liability for the accuracy of the information provided. The content on this website serves informational purposes only and does not constitute legal or tax advice.
It cannot replace personalized, binding consultation tailored to individual circumstances. All information is provided without guarantee of completeness or correctness.
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