With the Tax Reform of 2020, Austria introduced the company bike model, allowing businesses to provide their employees with bicycles with tax benefits. Where do we stand three years later, and how could it evolve if specific barriers for employees and public servants could be removed? JobRad Austria, a member of Cycle Competence that has been involved with the company bike solution from the beginning, provides an up-to-date overview of the situation.
The background in Austria
The topic of the company bike model was already addressed on radkompetenz.at in 2018 (“Expert Opinion on Non-Cash Benefit“) and in 2019 (“Legal Equality of E-Bikes to Electric Cars as Company Vehicles“) when the relevant tax reform was still in development. In September 2020, it was reported that “Tax Reform Makes Company Bike Models Possible!” because at the time, the Parliament had made an important decision: As part of the tax reform, employers were entitled to deduct tax when purchasing company bicycles with or without electric propulsion from January 2020. As a result, employees were entirely exempt from non-cash benefits when they received a company bicycle from their employer, even for private use.
Origin and success in Germany
The company bike model, known in Germany as the “Dienstrad” (company bike), has been accessible to employees for over a decade and has become a common sight on bike paths and roads. Bicycles purchased under this model have become an integral part of the German bike sales figures. In 2022, company bikes accounted for 15% of the bicycle industry’s turnover in Germany. How was this success achieved? Among other things, through numerous clarifications and optimisations of the tax and labor law framework.
The successful model in Austria
Fortunately, Austria is experiencing a similar development, with some providers successfully operating as intermediaries for company bicycles. JobRad Austria counts large and reputable companies such as Aldi Süd Holding, the TÜV AUSTRIA Group, and Atomic Austria GmbH among its customers. Over time, the details of company bicycle leasing have been clarified, expanding the possibilities, and the work of the employees at JobRad Austria as experts in company bicycle leasing has led to a clearer understanding of the framework.
Key Decisions of the Last Two Years:
- Does a company bicycle user need to keep a logbook? No, employees are allowed to use their bicycles for both work and personal purposes. There is generally no requirement to prove the professional use of the bikes.
- Is it obligatory to pay value-added tax (VAT) for company bicycle leasing through salary conversion? No, the Federal Ministry of Finance has also decided against it.
- Does the company bicycle need to be taxed upon acquisition after the leasing period? Yes, if there is a taxable benefit, it should be subject to taxation.
- Can you claim the commuter allowance while using a company bicycle? According to § 16 Abs. 1 Z 6 lit. b EStG, this is possible!
Milestone: Amendment of the non-cash benefit value regulation
What may seem somewhat cumbersome represents a major breakthrough for company bicycle leasing: the new non-cash benefit value regulation clarifies that a non-cash benefit of zero euros should also be applied to the provision of a bicycle through the conversion of nationally set gross earnings by job sector. The Austrian Health Insurance Fund (ÖGK) reacted promptly and determined that since January 1, 2023, the remaining gross earnings after salary conversion will be the basis for national insurance contributions.
As a result, the labor costs for both employers and employees are reduced, making the model even more attractive for all parties involved. In practice, this means that both the taxable basis for income tax and national insurance contributions for an employee receiving a company bicycle decrease. In other words, they save compared to a traditional purchase. Individual savings can be easily calculated using the JobRad advantage calculator (“JobRad Vorteilsrechner“)
Company bicycles (still) not for everyone
One advantage of company bicycle leasing is that it makes sustainable mobility affordable for all employees, especially those with lower incomes. Or at least it should. Currently, salary conversion is unfortunately not possible for employees who are paid according to a minimum salary calculated on a nationally set agreement. A permanent solution is needed to address this inequality in the interest of affected employees.
Public servants are also largely excluded. Their employment contracts currently do not allow salary conversion for bicycles. Although the latest civil service amendment included a provision for company bicycle leasing, the conditions are defined in a way that allows only a few employees to take advantage of the product. Due to numerous inquiries from affected employers, JobRad, together with Cycle Competence Austria and representatives from the Ministry of Climate Protection, federal states, and trade unions, discussed possible solutions for how affected employers and their employees can still participate in the company bicycle concept.
The optimistic outlook
The JobRad team is confident that the aforementioned limitations can be overcome together with all parties involved: “The opportunities in terms of sustainability and social justice that come with company bicycles are significant. Topics like health, lack of parking space, and the attractiveness of companies and locations are increasingly motivating businesses to introduce company bicycle leasing – and the numbers speak for themselves. “Currently, we are advising hundreds of companies on the JobRad model”, says Edwin de Jong, Managing Director of JobRad Austria.
In this process, it’s essential for companies to voice their concerns publicly regarding these obstacles. JobRad is happy to provide support; simply contact them at email@example.com.
For general information, please visit JobRad Österreich.
Pictures 2,3 (c) JobRad Österreich GmbH, pictures 1,4 (c) JobRad Deutschland GmbH