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Preferrential tax treatment for employer bikes

Updated: Nov 16, 2022

Sustainability and climate protection become more and more important in the working world. Many employers in Austria therefore equip their employees with bicycles or e-bikes also for private use free of charge or for a favorable monthly user fee.

  • Use without charge: To use the employer bike free of charge at least 10% of the bicycle usage must be for proven business purposes (e.g. business trips). Please note: the (daily) trip from home to work and back in principle is not considered as a business trip!

  • User fee: If the minimum use for business purposes is not achieved (i.e. purely private use), it is recommended to charge the employee a (low) user fee. However, this may not exceed the (monthly) depreciation expense for the bicycle based on the gross purchase price paid by the employer. With a user fee such as 1% of the gross purchase price per month based on an assumed useful life of 48 months, the employer and the employee roughly share the acquisition costs of the company bicycle.

The current regulation for remunerations in kind (Sachbezugsverordnung) is currently under review and will also provide provisions for employer bicycles. In this context, the new regulation provides for a non-cash benefit value of zero for the private use of an employer bicycle.

How to deal with a company bicycle in the monthly payroll

In our opinion, there are two ways to handle this in the monthly payroll:

  • The provision of the employer bike can be granted in such a way that the gross remuneration remains the same, i.e. the non-cash benefit for the private use of the bike is zero and a possible user fee is deducted from the net salary.

  • It is also possible to consider and deduct the user fee from the gross salary by means of a salary conversion, without changing the total gross remuneration of the employee. This specific gross salary conversion does of course not trigger any income tax (Lohnsteuer) for the non-cash benefit. There are also no additional payroll related charges (Lohnnebenkosten). However, social security law considers the provision of a company bike in connection with a salary conversion differently as a mere agreement on the use of a bike, which is why the salary conversion does not reduce the gross assessment basis for social security contributions.

The maximum acquisition costs of company cars are "capped" for tax purposes, whereas there is currently no limit for bicycles and electric bicycles. The acquisition costs for company bikes are to be capitalized in full in the balance sheet and depreciated over the period of use as a business expense. This also applies if the bicycle is used exclusively for private purposes. Operating expenses, in particular maintenance costs, can be fully deducted by the employer as a business expense.

The Input VAT deduction for employer bikes is in principle only possible for entrepreneurs who are fully entitled to deduct VAT. Input VAT deduction is possible if at least 10% of the bicycle usage is for proven business purposes. This applies to both the acquisition costs and the operating costs (e.g. maintenance, repair). If a VAT deduction is claimed, VAT must be calculated and paid from the user fee accordingly.

The purchase of a bike from the employer at a discount is subject to tax and thus triggers a non-cash benefit in the amount of the difference between the fair market value and the more favorable purchase price for the employee. Since there are currently no guidelines for determining the relevant market value, a case-by-case assessment is required. The possibility of a simplified valuation of this particular non-cash benefit is currently not regulated.

If you want to discuss any of the topics raised, please contact our expert Martin Schmidt.

Picture: Wixmedia

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