Instead of buying a bike themselves, employees are increasingly taking advantage of the option of leasing a company bike. However, experts recommend that you calculate carefully whether it is worth it in your own case.
Michael Müller commutes to work on his company bike several times a week, around 22 kilometers there and back. “Thanks to the job bike offer, I can ride an e-bike for just under 5,000 euros that I honestly wouldn’t have bought otherwise.” Müller works for the special glass manufacturer Schott in Mainz. The company has been offering employees the opportunity to use leased job bikes for four years.
“To do this, I forego part of my salary every month equal to the leasing rate. That’s why I have a lower salary and therefore have tax savings on income tax.” His employer pays for theft and accident insurance, as well as the breakdown service, explains Müller.
Treated like a company car for tax purposes
The basic principle of the company bike is similar to that of the company car; twelve years ago they were given the same tax treatment. Additional tax breaks have applied to bikes since 2019. Employers, such as Schott AG, usually lease bicycles or e-bikes from special providers for a period of three years and give them to their employees in return for a waiver of payment.
If they also want to use the company bike privately, they have to pay tax at a flat rate of 0.25 percent of the bike’s list price as a monetary benefit. If employers provide their employees with a company bike in addition to the agreed original salary – i.e. not in exchange for deferred compensation, but as an extra salary – this remains completely tax-free for the employee, despite the monetary advantage.
Health protection and climate protection
Schott AG says it wants to make a contribution to the health of its employees and climate protection through the Jobrad offer. The company also sees this as an opportunity to increase its attractiveness as an employer and saves on the already limited parking space because more employees come to work by bike.
But it is also a fact: Overall, the salary conversion of employees reduces the calculation basis not only for wage tax, but also for social security. This means employers also save on social security payments. Companies can also deduct leasing and insurance payments as business expenses.
Boom the Company bicycles
Company bicycles are trendy in Germany. Around 100,000 employers now offer leasing of company bikes, at least that is what the Federal Association of the Future of Bicycles, which represents several leasing service providers, assumes. Although there are no official nationwide figures, the industry association estimates that more than two million company bikes are in use in Germany. Last year alone, a million new ones were added; As recently as 2019, there were only 200,000 company bikes on the roads.
Specialist retailers in particular benefit from this development. For many bicycle shops, company bicycles have now become an important source of income. For example, more than half of all e-bikes sold in the Alexander Mohr shop near Mainz are leased bikes. In his eyes, this is not surprising; the advantages for his customers are obvious. “You don’t have to pay for the bike in full and inspection and insurance are usually included in the leasing package.”
This is not an isolated case; other bike shops are also observing this trend. “The leasing rate is definitely high, especially for high-quality bikes and e-bikes,” says Pablo Ziller from the two-wheeler industry association ZIV, and these are often company bikes. “The leasing business is definitely a driving force for our industry,” says Ziller. Bicycle leasing through employers has developed into an important market driver. Experts estimate that around one in four bikes comes to customers through leasing.
Calculate whether cycling is worth it
But there is also criticism of the trend. The service union ver.di advises those interested to think carefully about whether a company bike is really worth it, as the employee waiver of wages in the amount of the leasing rate reduces the calculation basis not only for wage tax, but also for social security. “The salary conversion reduces your own pension entitlement,” says Andreas Henke from the ver.di Baden-Württemberg regional district.
Of course, it’s usually just a little more than a euro less in pension per month. That sounds harmless, but on average people get a good 20 years of pension multiplied by twelve months. “Depending on the leasing amount, that works out to several hundred euros,” says Henke. According to calculations by ver.di, the company bike is financially worthwhile, especially for high-priced bikes and for people with high incomes.
Consequences for social insurance
Since the deferred compensation model means that employers also have to pay fewer social security contributions, the union criticizes the fact that the solidarity community loses money through company bikes. “With a monthly leasing sum of 100 euros, the employer saves around 20 euros in social security contributions,” calculates Henke. That’s 720 euros plus in three years for a one-off administrative process. And this amount that employers save would not be passed on to employees as a subsidy by most companies.
Michael Müller sees commuting by bike to his job in Mainz as a form of exercise. Since he has been riding his company bike to work, he and his wife have given up one of their two cars. Müller could imagine buying his company bike at the end of the three-year leasing period; This is often possible for a discount. “For my first job bike, the service provider made me an attractive offer after the term had expired.” At the time, it was significantly cheaper for him than if he had bought the same bike privately, says Müller.