Rented work bikes are trending: Is a company bike worth it?

Rented work bikes are trending: Is a company bike worth it?

Michael Müller travels several times a week by bicycle from his company to work, about 22 kilometers round trip. “Thanks to the Job Bike offer I can ride an electric bike for just under 5,000 euros, which I honestly would not have bought otherwise.” Müller works for the special glass manufacturer Schott in Mainz. The company has been offering its employees the possibility of using rented work bicycles for four years.

“To do this, I give up a part of my salary every month equivalent to the rental rate. That’s why I have a lower salary and, therefore, savings on income tax.” His employer pays for the theft and accident insurance as well as the repair service, explains Müller.

Treated as a company vehicle for tax purposes.

The basic principle of the company bicycle is similar to that of the company car; Twelve years ago they were given the same tax treatment. Additional tax exemptions have been applied to bicycles since 2019. Entrepreneurs, such as Schott AG, usually rent bicycles or e-bikes from special suppliers for a period of three years and give them to their employees in exchange for a payment exemption.

If they also want to use the company bike privately, they will have to pay a flat-rate tax of 0.25 percent of the list price of the bike as a monetary benefit. If employers provide their employees with a company bike in addition to the original agreed salary, i.e. not in exchange for deferred compensation, but as additional salary, this becomes completely tax-free for the employee, despite the monetary advantage .

Health protection and climate protection

Schott AG wants to contribute 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 save on already limited parking space because more employees come to work by bicycle.

But it is also a fact: in general, the salary conversion of employees reduces the calculation base not only for the tax on salaries, but also for social security. This means that employers also save on social security payments. Businesses can also deduct lease and insurance payments as business expenses.

Boom the company bikes

Company bikes are all the rage in Germany. Around 100,000 businesses currently offer company bike rentals, at least so believes the Federal Association for the Future of Bicycles, which represents several rental service providers. Although there are no official national figures, the industry association estimates that more than two million company bicycles are used in Germany. A million new ones were added last year alone; In 2019, there were only 200,000 company bikes on the roads.

Specialty retailers especially benefit from this development. For many bike shops, business bikes have now become an important source of income. For example, more than half of all e-bikes sold at Alexander Mohr’s shop near Mainz are rental bikes. In his eyes, this is not surprising; The advantages for your customers are obvious. “You don’t have to pay for the bike in full and inspection and insurance are usually included in the lease package.”

This is not an isolated case; Other bike shops are also seeing this trend. “The rental price is certainly high, especially for high-quality bicycles and electric bicycles,” says Pablo Ziller of the two-wheeled vehicle industry association ZIV, and these are often company bicycles. “The leasing business is without a doubt a driver for our sector,” says Ziller. Bicycle leasing through employers has become a major market driver. Experts estimate that approximately one in four bicycles reaches customers through leasing.

Calculate if cycling is worth it

But there are also criticisms of this trend. The service union ver.di recommends that interested parties think carefully about whether a company bike is really worth it, since the exemption from employee salaries for the rental amount reduces the calculation basis not only for the tax on salaries, but also for social security. . “The salary conversion reduces the pension entitlement,” says Andreas Henke of the regional district ver.di Baden-Württemberg.

Of course, the pension is usually just over one euro less per month. This sounds harmless, but on average people receive a good 20 years of pension multiplied by twelve months. “Depending on the rental amount, this amounts to several hundred euros,” says Henke. According to ver.di calculations, the company bike is worth it financially, especially for expensive bikes and for people with high incomes.

consequences for social Security

Since the deferred compensation model means that employers also have to pay less social security contributions, the union criticizes the fact that the caring community loses money on company bikes. “With a monthly rental amount of 100 euros, the entrepreneur saves about 20 euros in social security contributions,” Henke calculates. That’s 720 euros more in three years for a single administrative procedure. And this amount saved by employers would not be passed on to employees as a subsidy by most companies.

For Michael Müller, cycling to work in Mainz is a way to exercise. Since he rides his company bike to work, he and his wife have given up one of his two cars. Müller imagines buying his company bike at the end of the three-year lease period; This is usually possible with a discount. “For my first bike job, the service provider made me an attractive offer after the deadline.” At the time it was much cheaper than if he had bought the same bike privately, says Müller.

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