23. February 2021
Everything you need to know about bike leasing
In times of climate change and cities collapsing in rush-hour traffic, the company bike is well on its way to outstripping the company car. Providers such as JobRad, Bikeleasing Service, Businessbike Leasing, Eurorad or Lease-a-Bike are driving this development and are formally bringing the "company bikes" in-house. In this article, we explain how bike leasing works, what you need to consider in terms of tax and what financial advantages it brings.
Who can lease a bike?
There are very few providers that offer bike leasing for private individuals. When people talk about bike leasing, they are primarily referring to the leasing of company bicycles for employees, but also for the self-employed, freelancers and tradespeople. Valentin Steber, who works as a sales representative for JobRad in the Bavarian region, explains the basic principle as follows: "The employer leases the company bike and lets the employee use it - also for private use. Currently there are around 500,000 service leasing bikes rolling in Germany. And the trend is rising!"
How does bike leasing work?
As an employee, you should first ask your employer whether it already offers company bikes. If not, the company can conclude a corresponding leasing framework agreement for its employees with one of the bike leasing providers. "You might even give your boss the good idea of subsidizing the company bikes or even taking them over completely," says Steber. "In this way, your employer actively contributes to environmental protection and incidentally increases its attractiveness."
If you already have a framework agreement with a bicycle leasing provider, you can register online and select the bike you want from the appropriate retail partner.
Service bike leasing is very simple: You choose the bike you want, your employer leases it and lets you use it!
Tax advantages for employees
Leasing a company bike is not only good for the environment and health, it is also easy on your wallet. Thanks to additional tax incentives, bike leasing can save up to 40% compared to a traditional purchase. In principle, bike leasing is financed in two ways:
1. bicycle leasing by salary conversion
Here, the monthly installments of the lease are deducted directly from the gross salary. Since the reduced gross salary forms the basis for calculating income tax and social security contributions, these deductions are correspondingly lower for the employee. Company bicycles are generally also used during leisure time. Therefore, the private use of the company bicycle should be regulated in a transfer agreement or addendum to the employment contract. Private use results in a "non-cash benefit" for tax purposes, which must be taxed on a monthly basis. In the case of company bike leasing, 0.25 percent of the gross list price of the company bike is applied. This means that bike leasing is also more favorable from a tax perspective than the private use of a company car, for which one percent of the list price is recognized as a non-cash benefit. The list price of the company bike is also rounded down to a full 100 euros. This also makes a company bike more attractive than a company car.
The amount of the tax benefits depends, among other things, on factors such as the purchase price, salary and tax bracket. With the Bike leasing calculator from JobRad, the financial savings can be calculated very clearly. In addition, the calculator also shows a comparison of the costs between the direct purchase of a bike and bike leasing via the employer.
2. the company bike as a salary extra
If an employee receives a company bicycle in addition to his or her salary and does not have to contribute to it financially, this is referred to as a salary supplement. In this case, there are no savings due to lower income tax and social security contributions, as the gross salary remains unchanged. However, there is no taxation of the non-cash benefit for private use.
Bike leasing for freelancers and self-employed people
Very few providers offer bicycle leasing for purely private users. Why? The leasing installments are not tax-deductible for private individuals. The only advantage here is that the often high price of a high-quality bicycle is paid in smaller installments. The situation is somewhat different with bike leasing for the self-employed, freelancers and tradespeople. The German government also promotes leasing for this group as part of its support for environmentally friendly and healthy mobility. Since 2019, leasing of bicycles and pedelecs used for business purposes is no longer subject to withdrawal tax for three years, i.e. until the end of 2021. In plain language: If the bike is part of the business assets, then the running costs incurred through repairs and the purchase of spare parts and accessories count as business expenses and thus reduce the taxable profit.
Important: A leasing contract runs for 36 months with most providers. After that, you can return the bike or often buy it for a so-called "residual value". This is similar to a company car. If the user takes over the company bike at the end of the leasing period, the tax authorities assume a residual value of 40% for tax purposes. "Since JobRad calculates with an expected used purchase price of currently 18% of the actual purchase price, the difference represents a non-cash benefit," explains Steber. However, this does not have to be taxed by the employee, as JobRad bears the tax burden itself.
What about services?
All bike leasing providers offer an all-round package. JobRad, for example, offers comprehensive insurance including a mobility guarantee. In addition, you can book the annual JobRad inspection at the dealer. This checks the bicycle thoroughly on the basis of an extensive checklist. "If you even take advantage of the JobRad full service, you receive a budget for wear-and-tear repairs in addition to the annual inspection," explains Steber.
Tip: The employer decides in the agreement with the bike leasing provider whether inspection and other extras are available. Anyone leasing a company bike should ask the employer whether a service package is included and what services are included.
Bike leasing makes your path to your dream bike even easier.
What role does the specialist trade play?
The bike leasing providers are in direct contact with the dealers. "That's very important to us," says Steber from JobRad. "That's why we are not only connected to the bike stores via our specialist dealer portal, but are also there for you personally. Our partner managers provide assistance in everyday business bike leasing - by phone, over the net and directly on site at the dealers."
Why is e-bike leasing so trendy?
More and more people are not only attaching importance to a healthy, sustainable and environmentally friendly diet. They also want to keep their carbon footprint as small as possible in everyday life. And that's where cycling is high on the agenda. "Particularly with the e-bike, the possibilities have improved considerably for covering longer distances to work without arriving completely sweaty," says Steber. Stephan Koch, field sales representative at ROTWILD, adds, "The basic idea is certainly a sensible commuting option to work and back home again. This way, the way to the office is environmentally conscious, congestion-free and with a good feeling. Because before you sit down at your desk, you've given your circulation a kick start." Plus, you can get close to your dream bike. "Leasing makes it much easier to acquire and ride a true top-of-the-line bike." Who needs a company car when a company bike can make big dreams come true.
In times of climate change, employers who offer their employees bike leasing are not only demonstrating their innovative and sustainable attitude. The company can also deduct all leasing and insurance installments it spends on employees' company bikes as business expenses. Thus, leasing company bicycles is an advantage for both sides.