Company bicycle for private use – what taxation rules apply?

Every employer can provide its employees with a company bicycle for private use free of charge or at a reduced price. The resulting benefit in money’s worth is then part of the taxable wages.

So-called pedelecs are operated with a max. 250 watt motor and are limited to a speed of 25 km/h. These bicycles do not have to be registered or insured and are classified as bicycles under traffic law. Therefore, the same conditions apply under payroll tax law as for a normal bicycle without motorization.

The S-pedelecs can reach speeds above 25 km/h (up to 45 km/h, motorization 250 watts +) due to assisted motorization. For this reason, these bicycles are treated as motor vehicles and the taxation is based on the regulations of company car taxation. Therefore, the surcharge of 0.03% of the list price per distance kilometer for the trips between home and the first place of work must also be taken into account as a non-cash benefit.

How is the privately used company bicycle taxed?

The provision of pedelecs and non-motorized bicycles in addition to the wages owed anyway results in tax-free and non-contributory wages (the tax exemption currently applies until December 31, 2030). However, taxable and contributory wages exist if the aforementioned transfer takes place as a result of a conversion of the wages owed anyway (cash wage conversion).

For the determination of the non-cash benefit, the average value of 1% of the manufacturer’s or dealer’s recommended retail price, rounded down to the full EUR 100, at the time the bicycle is first put into operation, including sales tax, is used.

With the application of this monthly average value, the private use is completely compensated.

If the employer provides the employee with a company e-bike / pedelec or a normal bicycle for the first time in the period from 01.01.2019 to 31.12.2030, 1% of the quarter of the recommended retail price rounded down to a full EUR 100 is to be applied until 2030.

The EUR 44 exemption limit for non-cash benefits cannot be applied here.

If a so-called S-pedelec is provided free of charge, the imputed income is determined in accordance with the applicable principles for the provision of a motor vehicle. In this case, the private use (1% method) and, in addition, the journeys from home to work (0.03% of the list price per kilometer) must be taken into account for the valuation of the imputed income.

The logbook method can be used instead of the 1% method

If an e-bike has been classified as a motor vehicle, the same tax benefits are applied as for the taxation of a company vehicle (1% method).

• For S-pedelecs purchased in the period from Jan. 1, 2013 to Dec. 31, 2018, the applicable domestic gross list price must be reduced by the cost per kilowatt-hour of battery capacity included therein.
• For S-pedelecs purchased during the period Jan. 1, 2019, through Dec. 31, 2030, only 1/4 of the applicable domestic list price must be used throughout use.

Recommendation:

Without a contractual agreement with the employee, the employer remains obligated to pay the leasing installments in the event of termination of the employment relationship during the current leasing contract. In this case, corresponding regulations should be recorded in writing in advance.