Are you self-employed and in need of an economical way to travel? Then opt for a company bicycle. Buying or leasing through your company is both economical and fiscally attractive. We explain to you step by step how this works and what you need to know.
What does a 'company bike' mean for a self-employed person?
You arrange a company bicycle through your company. You can use the bike for both business and private use. Do you also use the bicycle privately? Then you pay an additional taxable benefit on that. Do you only use it for business purposes? Then not.
The additional charge is 7% of the list value. Do you use the bike for work for at least 10%? Then that bike belongs to your business assets. Every type of bicycle counts: from granny's bike to e-bike or speed pedelec. You can buy the bike and put it on your balance sheet, or opt for operational lease.
Since 2020, this scheme has been more attractive due to more lenient rules. It is especially useful for self-employed workers who often visit clients or work close by. Smart and sustainable: two birds with one stone.
Tax advantages of a company bicycle for self-employed persons
Deduction of expenses and investment deduction
You can deduct the cost of buying or leasing from tax. Do you buy the bike? Then you write it off over several years. Do you spend more than €450 (excluding VAT)? Then you can often use the small-scale investment allowance (KIA). Do you opt for a sustainable bicycle, such as an electric cargo bike? Then you are sometimes also eligible for the environmental investment deduction (MIA).
VAT refund
You can deduct the VAT on the purchase or lease if you use the bike for business. Do you also use the bike privately? Then you only deduct the business part. You can also do it at the end of the year via a VAT adjustment.
Addition
Do you also ride your business bike privately? Then 7% of the catalogue value is added to your income. For a €2,000 bike, that's €140 a year. This amount counts as extra profit, on which you pay tax.
Buy your own bike or lease it on company business?
Buy a bike
Do you buy the bike on a business basis? Then your company pays for it and the bike appears on the balance sheet. You can reclaim the VAT and depreciate the bike each year. Do you invest enough in one year? Then you can also use KIA. The bike is ultimately yours.
Do you want to use the bike privately later? Then you have to take it out of the company. You then settle on the current value, including VAT if you have previously claimed it back.
Bike lease
With a bike lease, you pay a fixed amount to the leasing company every month. The bike remains theirs. You can deduct the leasing costs and VAT. You don't have to invest all at once and maintenance is often included.
Which is smarter? Buying is convenient if you want to invest and own the bike yourself. Leasing fits better if you prefer to spread costs and want convenience. Both options are tax-friendly.
Considerations and conditions from the Inland Revenue
Of course, you want to avoid hassles with the tax authorities. Therefore, you would do well to follow the rules. These are the main points of interest:
- Use the bike at least 10% for work.
- Do you also drive privately? Think about additional taxes and VAT adjustments.
- You may no longer get mileage allowance for this bike.
- Does the bike cost more than €450? Then you have to depreciate, not deduct it all at once.
- Process everything properly in your tax return. From VAT to addition and profit.
- Keep proof of business use, for example with a simple trip list.
Conclusion
A company bicycle is useful for the self-employed person who is often on the road for work. It gives you a tax break, you can reclaim VAT and the additional taxable benefit is low. You have the choice of buying or leasing. Both are fiscally attractive.
Do you work in the city, travel a lot or care about sustainability? Then you will get extra benefits. Just make sure your administration is correct and you follow the rules properly. That way, you cycle to every appointment cheaply and green.
