The Netherlands have a reputation as a bicycle country. So it should surprise no-one that company bicycles are a popular means of transport. A company bicycle can save you money: there are tax benefits for entrepreneurs with and without employees. Read here which schemes there are and which ones you can use.
On this page
What arrangements are there for your bicycle plan?There are four different tax schemes for a bicycle, electric bicycle or pedelec for your company:
- Company bicycle or lease bicycle
- Use part of the gross salary
- Kilometre allowance
- Interest-free loan
The schemes you can use depend on your situation:
- You are a sole proprietor (eenmanszaak) and want to buy a company bicycle for yourself: you can make use of the Company Bicycle scheme, but not of the other schemes, because you are not an employee.
- You want to arrange a bicycle for your employee(s): you can make use of all four schemes.
- Are you the director-major shareholder (dga) of your BV or NV? Then you are also an employee and you can make use of all the available schemes.
Company bicycle or lease bicycle
You buy or lease a company bicycle. For yourself or for your employee. For income tax and payroll taxes, the value of the bicycle is 7% of the suggested retail price of the bicycle. You can check the suggested retail price (in Dutch) on bijtellingzakelijkefiets.nl. If you have a sole proprietorship, add the 7% as an addition to your profit. As an employer, you add the value to the gross annual salary of your employee. You withhold wage tax / national insurance contributions from the amount of that addition per tax return period. It does not matter how you use the bicycle. You may use the bicycle privately, and you do not have to use the bicycle for commuting.
Your employee has a gross annual salary of €35,000.
The suggested retail price of the bicycle is €2,000.
The annual addition is 7% of €2,000 = €140.
The employee pays wage tax / national insurance contributions over the additional amount. For 2020, this is €58 at this annual salary. Your employee then pays € 4.83 for a bicycle worth €2,000 per month.
You pay employee insurance premiums and healthcare insurance premiums on the addition.
Does your employee contribute?In that case, you can deduct the monthly contribution from the amount of the addition. Please note: you may not deduct more than the amount of the addition.
Keep the addition untaxed for your employeeThe amount of the addition remains untaxed if you indicate that the amount is a final-levy wage. In that case, the bicycle will cost your employee nothing. You can only do this if the cost remains below the ‘discretionary scope’ (the available limit, see the regulation: Work-related costs scheme). Otherwise, you will pay an 80% final levy on the amount of the addition. You must state the final-levy wage in each tax return period.
Kilometre allowance no longer untaxedIf you have bought or leased the bicycle for your employee under the Company Bicycle scheme, the kilometre allowance (or mileage allowance) for commuting by bicycle is no longer tax-free. You can still give your employee a tax-free allowance for commuting by public transport or by car.
Deductible expenses for employersBecause you pay for the bicycle for your employee, you can deduct the costs from the profit. You do this with an annual deduction. Find out how to calculate the amount of the deduction (in Dutch). VAT is deductible for a maximum of € 130 if you meet the conditions. This means that you may deduct the full VAT for a bicycle of € 749 or less, if:
- you buy or lease a bicycle for your employee for the first time;
- your employee does not receive any other allowances for commuting;
- your employee does not pay a personal contribution for the bicycle.
Deductible expenses for sole proprietorshipDo you use the bicycle for your company? In that case, you can deduct the costs for the company bicycle from the profit with an annual deduction. Find out how to calculate the amount of the deduction (in Dutch). VAT is deductible for business activities that are subject to VAT. For example, if you have a courier service and deliver packages by bicycle. Read more about which VAT you can deduct (in Dutch).
Use part of gross salaryWith the gross / net allowance, your employee hands in part of their gross income. For that part, they receive a compensation to buy a bicycle. You indicate this allowance as the final-levy wage. You do not pay tax over this, as long as you stay within the discretionary scope of the work-related costs scheme. Because the amount is deducted from the gross salary, you and your employee pay less wage tax and premiums.
One of your employees wants to buy a bicycle. He has a gross monthly salary of €4,500. The bicycle costs €1,250. You convert €1,250 of your employee's gross salary into an allowance for the purchase of the bicycle. You do this by deducting that amount from his gross salary. You can do this in one go or spread out over several months within the same calendar year.
Normal month for your employee:
- Gross salary €4,500
- Taxed at 40% (€1,800 in tax)
Month of bicycle purchase:
Your employee will receive a net payment of €1,250 in his account. This allowance is deducted from the gross salary.
- Gross salary (€4,500 - €1,250) = €3,250
- Taxed at 40% (€1,300 in tax)
- Remains: a net salary of €1,950