Bicycle plan for employees? How it works.
Do you want to encourage your employees to cycle to work more often? As cycling is good for people and the environment the government has introduced certain fiscal and legal measures in order to stimulate an increase in the number of people who cycle to work. An additional advantage is that employees who cycle more often are generally healthier and happier than their colleagues who drive cars to the workplace, and that benefits your company. If as an employer, you want to encourage an employee to purchase an (electric) bicycle, various attractive tax measures have been created for this purpose. Would you like to know more about a bicycle plan for employees? In this article Moneywood has provided some information on this topic:
Company bicycle and income tax
As an employer, you can purchase a company bicycle or bicycles for your staff. He or she then uses the company bicycle for work-related kilometers as well as privately. In return for the personal use of the bicycle, you will have to pass on a small monthly addition to income tax, as you would with company cars.
Addition for private use
The addition that you have to charge your staff for the personal use of a company bicycle is 7% of the new price (list price, click here for an overview in Dutch). This is added to the salary and in practice often amounts to a fictitious 'wage increase', of which a number of euros per month is paid in income tax. This means, your employee pays compensation for the personal benefit of the bicycle. You and the employee can decide for yourself to what extent the bicycle is used for business or private purposes. There are no rules for a minimum business mileage.
Bicycle in the final levy scheme
In exceptional cases, as an employer, you can choose to make use of the final levy wage scheme, where you do not have to charge an additional tax liability and the bicycle is therefore completely free of charge for the employee. If you want to make use of this scheme, it is important that you are sure that there is sufficient free space for this. This prevents you from having to pay 80% tax on the addition via the final levy.
Bicycle addition to taxable income in the wage declaration
You add the addition for the private use of the bicycle to the employee's gross annual salary. You deduct wage tax/national insurance contributions from this addition for each tax return period. You also pay the employee insurance premiums and the employer's ZVW levy to the Tax and Customs Administration on the addition to taxable income.
Buying a bike with an employee bike plan
Do you want to motivate employees to buy their own bicycle (whether or not for commuting)? With a bicycle plan, you can make the purchase of a bicycle financially attractive for your employees. This gives them the opportunity to buy a new bicycle themselves with a tax advantage: the employee can then pay the purchase price from their gross salary. As no tax has been deducted from the gross salary, your staff can buy the bike more cheaply, as it becomes is tax-free. The amount that the employee surrenders from their gross income for the purchase of the bicycle can be designated as final levy wages. Please note -again- that you stay within the free space.
Want to know more?
If, as an employer, you want to stimulate more cycling amongst your staff, you can participate in the initiative thats how you cycle (in Dutch). With this scheme, the government aims to provide insight into the benefits of and possibilities for cycling more often. You can click here (in Dutch) to contribute to the mission 'Choose the bike'. With 'Choose the bike', the government aims to get 10% more employees on their bicycles together with employers. Moneywood published this article about company cars and income tax. Here you can read more about purchasing a company bike for yourself as an entrepreneur.
