Riding a motorbike for business can be very interesting from a tax perspective for self-employed people and entrepreneurs. Think VAT refunds, deductible expenses and other nice tax advantages. But beware: additional taxes and private use also play a role in this. In this article, we will tell you how to get the most out of your company motorbike.
When is a motorbike business?
A motorbike counts as business property if you use it for at least 90% of your trips for your business. And that is very broad. Think of customer visits, appointments and other business mileage. Do you drive less than 90% for business? Then different rules apply for tax deductions and VAT.
Conditions for a company motorbike
Want to put a motorbike on your business? Then you need to meet a few conditions:
- At least 90% business use: Your bike should be used mainly for work trips.
- Proof via trip registration: The Inland Revenue may ask for proof that you are actually using the bike for business purposes.
- Business necessity: When in doubt, the Inland Revenue may even intervene if the use of your bike is not convincingly businesslike.
- VAT correction for private use: And do you also use the bike privately? Then you have to set that off in your VAT return.
Tax benefits: Deductible expenses
A motorbike on business is very interesting from a tax point of view because you can deduct several expenses:
- Depreciation: Your motorbike is depreciated as an asset over several years.
- Maintenance and repair: All business maintenance costs are tax deductible.
- Fuel costs: When you drive business kilometres, you may include fuel costs.
- Insurance and vehicle tax: These business expenses are fully tax deductible.
- Accessories and equipment: Your helmet, motorbike clothing and cases are also deductible, as long as they are used for business purposes, of course.
- Small-scale investment deduction (KIA): As an entrepreneur, do you invest €2,801 or more? Then you can get additional tax benefits.
Deducting VAT on a company motorbike
If you buy a motorbike on a business basis, you can reclaim VAT on the purchase and maintenance costs, provided you buy the motorbike over 10% business use. Do you also use the motorbike privately? Then you have to make a correction for private use in your VAT return. The threshold for VAT correction is 500 km private per year.
Do you purchase a motorbike on a business basis? Then you can reclaim the VAT on the purchase and maintenance costs. As long as you buy the motorbike over 10% business use. And do you also drive it privately? At more than 500 kilometres private per year you have to make a VAT adjustment on the VAT return.
Additional taxable benefit for company motorbikes
Do you also ride the bike privately and use it less than 90% business? Then you have to deal with addition. Unlike a car, there is no fixed percentage of, say, 22%. Instead, the addition is determined based on the actual number of private kilometres you drive.
How do you calculate the addition?
The additional tax is calculated like this:
(private mileage/total mileage) × engine cost (excluding VAT).
Example: Do you drive 3,000 km private out of 12,000 km total? Then you pay 25% of the total engine cost as an addition.
Motorbike licence business deductible?
This applies only if the bike is really necessary for your work. For example, for a driving instructor or courier who can't make any progress without a motorbike. Do you use the motorbike mainly for your daily rides from home to work? Then, unfortunately, the motorbike licence does not fall under the deductible expenses.
Buy motorbike privately and claim it on a business basis
Rather buy the bike privately, but deduct the business expenses? That is simply possible You can, in fact, deduct for each business kilometre €0.23 per kilometre declare. This can be a smart move if you use the bike a lot for both business and private use, without having to worry about additional tax liability.
Electric motor on business
A electric motor on business means double benefits. Namely, you can benefit from grants and the Environmental investment allowance (MIA). That means you can get up to 36% of the purchase cost can be additionally deducted, on top of the usual depreciation and other deductions. So not only driving green, but also enjoying nice tax benefits.
Conclusion
A motorbike on company business can be a smart tax option. But pay close attention to the rules for VAT deduction, additional taxable income and deductible expenses. If you use the motorbike for at least 90% business use, you will make the most of the tax benefits. And do you also use the bike privately? Then it's smart to see if private ownership with mileage allowance might be more advantageous.
