Making available for use as a remuneration component
Normally, making available for use is a component of the compensation, as set out in the employment contract, in the form of a salary conversion. Initially, the assessment of the value of the private usage as remuneration was on the basis of 1% of the manufacturer’s proportional recommended retail price, rounded off to the nearest € 100, on the date when the bike came into service (including VAT).
Over time, this proportion was gradually reduced. However, the date when the bike was initially made available for use is relevant for the assessment approach:
- up to 2019: based on the full amount of the recommended retail price,
- for 2019: based on half of the recommended retail price,
- from 2020: based on one quarter of the recommended retail price,
in each case, on the date when the bike came into service and with VAT included in the amount.
Making available for use in addition to the remuneration that is due
The non-cash benefits arising from the provision of company bicycles by employers to employees – in particular, for private usage and for use for journeys between the home and the primary workplace location – in addition to the remuneration that is due have been tax-exempt since 1.1.2019 (Section 3 no. 37 of the German Income Tax Act). This tax exemption was extended through to 2030 in the 2019 Annual Tax Act.
Acquisition of (electric) bikes by employees
Frequently, when the period during which employers make electric bikes available for use comes to an end, employees are given the opportunity to acquire the electric bikes that they have been using at the residual value, thus, at a price below the standard local final price. In the case of the acquisition of an electric bike, a distinction is likewise made as to whether this constitutes remuneration, or whether the transfer of ownership takes place in addition to the remuneration that is due.
For reasons of simplicity, the standard local final price of an electric bike where ownership is transferred to the employee after three years (36 months) of its useful life may be set at 40% of the manufacturer’s, importer’s or wholesaler’s recommended retail price, rounded off to the nearest €100, (including VAT) on the date when the electric bike came into service. The amount that results after the employee’s payment has been deducted will constitute the relevant non-cash benefit for tax purposes.
As of 1.1.2020, if employers transfer ownership of company bicycles to employees, free of charge or at a discount, in addition to the remuneration that would in any case be due then the non-cash benefit can be taxed at a flat rate of 25% and, in this case, no contributions would be payable.
Please note: The tax exemption for usage and the flat-rate tax when ownership of bicycles is transferred apply solely to (electric) bikes that are not deemed to be motor vehicles under transport guidelines, i.e. are able, among other things, to achieve a maximum speed of 25 km/h and are not subject to compulsory registration and insurance cover.