InsightsSeptember 8, 2020
Schemes for company (electric) bicycle
If you’re a shareholder of a BV (private limited company), you have the option to buy an (electric) bicycle for your business and your staff. There are a number of things you have to take into account when you do this. Since 2020, a bicycle is even subject to an additional tax liability. In this article, we will explain what the consequences of getting a company bicycle are.
How does it work?
Getting a company bicycle is easy. You order a bicycle, make sure the invoice is in name of the business and book the invoice into your accounts as a corporate investment (an investment is a purchase with a value over €450 ex. VAT that lasts longer than one year). And with these three actions you have a company bicycle.
The Dutch government encourages the use of a (company) bicycle with various schemes. These regulations can differ per type of bicycle, so it’s useful to first find out which bicycle suits you (and your company) best. In the case of an electric bicycle this is even more important: the purchase price is comparable to that of a second-hand car. So don't make any hasty decisions.
What are the pros and cons?
Getting a company bicycle has consequences for 3 different taxes: corporate income tax, turnover tax and wage tax.
Corporate income tax (vennootschapsbelasting / vpb)
In terms of the corporate income tax, there are really only advantages to buying a company bicycle:
- You can deduct the bicycle, which results in a lower profit.
- You can submit costs (e.g. repairs) for the books.
- You may be entitled to small projects investment credit (KIA)
- You may be entitled to an environmental investment allowance (MIA).
Using the small projects investment credit, you’re entitled to an extra deduction if you invest at least €2,401 ex. VAT in business assets in one year. The percentage is 28%.
Using the environmental investment allowance, you’re entitled to an extra deduction and it also offers you the option of depreciating the bicycle in one year. The deduction varies between 13.5% and 36%. You’re entitled to it if you meet certain conditions, as stated on the website of the RVO.
Turnover tax (VAT)
In terms of turnover tax, you have the option to reclaim the VAT paid on the bicycle. However, the government has imposed a restriction on this. The rules are as follows:
- The VAT paid on the bicycle can be reclaimed, up to a maximum of €130 per employee. The part of the VAT that cannot be reclaimed, can be filed as an investment and can be depreciated as described under corporate income tax.
- The VAT on costs regarding the bicycle (e.g. repairs) can be fully submitted on the VAT return.
Wage tax (loonbelasting / lb)
In case of the wage tax, you will get to deal with additional tax liability. This is comparable to the one for company cars:
- The additional tax is 7% of the purchase price, including VAT (also known as recommended retail price). The addition always applies, whether it’s used privately or not.
- Certain travel allowances are no longer applicable.
The additional tax is often not that much. For a €2000 bicycle the additional tax will be about €5 per month. This amount is deducted from your salary. Most bicycles are a lot cheaper, meaning that the monthly tax addition is even lower.
Of course, if you or an employee buys the bicycle in a personal capacity (the invoice is not in name of the business), the additional tax liability does not apply. In that case, your employee can receive a tax-free travel allowance up to a maximum of € 0.19 per kilometre cycled for business purposes.