Taxing a Company Bike: What You Need to Know About taxes on bike leasing You Need to Know
A new bicycle and save on save ? Sounds good—and that’s exactly how it works with company bike leasing. But how does the taxation a company bike exactly, and how much do you actually save in the end?
The principle is simpler than it seems at first glance. This guide explains step by step how to tax salary conversion in bicycle leasing , what the 0.25% rule , and how much you’ll actually pay in the end.
How the taxsavings on the company bike come about
Normally, you buy a new bicycle or e-bike in a lump sum or in installments from your net pay—that is, from the money you have left after all taxes and taxes . With the company bikeleasing, it works differently: The monthly lease payment is deducted directly from your gross salary. This is known as salary conversion.
So you forgo a portion of your gross salary and, in return, get to ride the bike of your choice, which officially belongs to your employer during the lease term. The best part: Because your gross salary decreases, so does the amount on which income tax and social security contributions are calculated. So with company bikeleasing, you automatically less taxes and social security contributions —without you having to do a thing. This creates potential savings of up to 40% compared to a traditional direct purchase.
The 0.25% rule: the key taxbenefit of the company bike
Because you leased your bike or e-bike not only for your commute but also for personal use, this results in a so-called benefit in kind. This is essentially a notional additional income: The employer provides benefits in kind or services in addition to the regular salary—such as the personal use of a company bicycle—and this income is subject to taxation.
The legislature has established a favorable provision for this. The non-cash benefit for leased bicycles is taxed at only 0.25% of the original list price (rounded down to the nearest 100 €) per month, regardless of how much you use the leased bicycle for personal purposes. By comparison, for a traditional company car, this rate is 1 %—four times as high.
Important to know: The 0.25% rule applies only to traditional bicycles, pedelecs, and e-bikesthat are still classified as bicycles under traffic law. Fast e-bikes, known as S-pedelecs, which require a license plate, are not covered by this rule.
Good to know: 92% of the bikes leased through eurorad are e-bikes, with an average value of around 4,000 €. The tax benefit under the 0.25% rule is particularly noticeable with high-end bicycles is particularly noticeable.
Sample Calculation: Here's How You Benefit from a leased bike from the taxbenefits
An example makes the principle easier to understand. Let’s say you lease your dream bike—say, an ultralight road bike, a trail-tested mountain bike or a cargo bike for everyday family life—with a purchase price of 4,000 € and a gross monthly income of 3,500 € (tax bracket I):
Position | Amount |
Monthly Gross Lease Payment | approx. 110 € |
Tax Savings Through Salary Deferral | approx. 62 € |
Additional Tax on Non-Cash Benefits (0.25% rule) | about 6 € |
Actual monthly payment | approx. 54 € |
So, in the end, your company bike will cost you significantly less than the lease payment might initially suggest.
Important: This sample calculation includes only the base lease payment for the bike—the selected insurance package is intentionally not included here. In practice, you usually pay a total amount consisting of the lease payment and the insurance premium via salary deduction, which increases your actual monthly cost accordingly. The amount of your actual savings depends on individual factors such as your salary, your tax bracket, any tax-free allowances, and subsidies from your employer.
Calculate your personal lease payment and how much taxes you’ll save with bike leasing with just a few clicks using the eurorad leasing calculator.
Calculate your potential savings now>>
Salary Deferral or Salary Bonus: Two Ways to Get a Company Bike
There are basically two models for how your employer can provide you with a company bike:
- Salary Deferral: Essentially, you “pay” for the bike yourself through your gross salary, but you benefit from reduced taxes and social security contributions. This way, you save up to 40% compared to a direct purchase.
- Bonus Pay: Here, your employer “gives” you this company bike as a gift, in addition to your regular salary—essentially as a bonus. You pay absolutely nothing for the bike and can claim it as a fully tax-free .
The best way to find out which plan your employer offers is to check with your HR department directly. More information for employees can be found on our website.
What happens from a tax perspective at the end of the lease term?
At the end of the standard lease term (usually 36 months), the bicycle typically still has a market value of about 40% of the original purchase price. If you’d like to take ownership of your company bike afterward, you would normally have to pay this market value—plus the tax on the benefit you receive from the reduced purchase price.
However, eurorad lets you purchase at just 16% of the original price —a recognized benchmark by the North Rhine-Westphalia tax authorities.
Back to our example bike with a purchase price of 4,000 €: Taking over the loan at market value would cost you 1,600 €. At the discounted rate of 16 %, however, you’d pay only 640 €. That’s an additional savings of €960 .
This price advantage is also relevant for tax purposes, since it again constitutes a monetary benefit. The good news: eurorad handles this taxation for you on a flat-rate basis. You don’t have to worry about it yourself and will receive written proof for your tax returnin case you sell your bike or e-bike .
So it's no wonder that at the end of the lease term, 86% of users choose to purchase their leased bike.
Tax Certainty: What You Should Keep in Mind
Since tax laws are subject to change, the current rules regardingtaxof company bicycles may also change in the future. However, this does not normally affect existing lease agreements. The terms and conditions in effect at the time the agreement was entered into remain in force. Here’s how to find your dreambike for tax- price. Want to know how much your dream bike will actually cost you in the end? Calculate your individual monthly payment and your personal savings potential in just a few clicks with the eurorad leasing calculator.
Go to the Leasing Calculator >>
More than 5,000 authorized dealers throughout Germany are also available to provide you with personalized advice on models, features, and the right insurance package.
Find a bike shop near you now >>
Do you work for a company that doesn't have a eurorad framework agreement, or are you self-employed? With the Instant Order option, you can lease your company bike even without an existing contract.
Learn more about instant orders >>
Frequently Asked Questions on the Topic:
“Taxes on Company Bikes”
What exactly is the monetary benefit of a company bike?
The monetary benefit is a notional additional income resulting from the personal use of your company bike. Because your leased bicycle is not used solely for the commute , this benefit must be be taxed —though only at a rate of 0.25% of the list price per month.
Does the 0.25% rule also apply to S-pedelecs—that is, high-speed e-bikes with license plates?
No. The 0.25% rule applies only to traditional bicycles and e-bikesthat are classified as bicycles under traffic law. Different tax rules apply to speed pedelecs, which require an insurance license plate and a driver’s license (Class AM).
How much do I really save on taxes with a company bike lease?
The exact savings depend on your salary, your tax bracket, and the purchase price of the bike you want. On average, however, you can expect to save up to 40% compared to buying outright. The quickest way to calculate your personal monthly lease payment is with the leasing calculator.
Do I have to handle the tax obligations myself when leasing a bike?
No. Your employer automatically handles the ongoing tax withholding through payroll. If you switch to bike at the end of the term, eurorad handles the taxes on your behalf at a flat rate—including written documentation, should you need it for your tax return or to claim a tax deduction for your want to claim a tax deduction .
What are the tax implications if I purchase my company bike at the end of the lease term?
You can purchase the leased bicycle at a discounted rate of 16% of the original purchase price. This benefit is also tax-related, but eurorad handles the tax payment for you on a flat-rate basis.
