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Tax reform makes company bicycle models possible

On the subject of company bicycles the Austrian parliament has reached an important decision: As part of the tax reform passed at the end of September employers will be able to claim back input tax on purchases of company bicycles from 2020 (Vorsteuerabzug). Soon employees might also get legal clarity on the question on whether they have to report using company bicycles in their free time as non-monetary remuneration (Sachbezug). This means Austria could be ready for win-win company bicycle models from January onwards.

Flashback: Inequality and grey area

A company bicycle model means that employees provided with a bicycle by their employers which they can also use privately. Sometimes the users do carry a share of the costs. However, in Austria bicycles and e-bikes (defined under tax law as “Krafträder”, i.e. power bikes) cannot fully be deducted as input tax or from the gross wage – other than electronic cars. Additionally, the current regulations on non-monetary remuneration in case of private use are unclear only based on legal studies and expert opinions. We reported about this situation here in July.

But all this will change with the tax reform. Regarding the tax question around “Vorsteuerabzug”, i.e. input tax deduction, the inequality vis-á-vis electric cars was lifted. Being able to deduct the 20% USt after purchasing vehicles for employees is one of the big incentives for employers to set up these models – and it is also economically relevant. Currently only a “normal” bicycle can be claimed as “vorsteuerabzugsberechtigt”. But while e-cars have been made exempt from input tax since 2016, e-powered bicycles (Krafträder) are currently not.

Parliamentary decision ends discrimination of e-bikes

With the now passed tax reform MPs have agreed to allow companies to deduct input tax when purchasing e-bikes. They also gave the green light for the finance ministry to alter the regulations regarding non-monetary remuneration for the “private use of company motor cars, power bikes and bicycles” to exempt all of these cases from income tax. The Austrian finance ministry (BMF) still has to rewrite the “Sachbezugswerteverordnung” to that effect.

Until then the private use of company bicycles (with or without e-motors) could theoretically lead to back taxing. This means company bicycle models can only be set-up reliably once the regulation on non-monetary remuneration has been amended and has taken effect. But what remains certain is that employers purchasing e-bikes for their employees can deduct these from input tax from January 2020.

We will report as soon as the “Sachbezugsverordnung” has been amended. Information about company bicycle models and the current legal framework can also be viewed on the website jobrad.at . It is regularly updated by CycleCompetence member klimaaktiv.mobil, an initiative by the ministry for the environment BMNT. The parliamentary documents regarding the tax reform can be viewed here (mainly page 7, in German):

The new regulations regarding “Vorsteuerabzug” are part of “making the tax system more ecological”, as the draft legal amendment put it. In future the tax burden on vehicles will not only be calculated via cylinder capacity and power but also based on CO2-emissions.

Will Austria get company bicycle models similar to Germany?

In Germany one way to access a company bicycle is for a company to make a tax-exempt purchase of bicycles either directly or via a “Job-Rad” provider (z.B. Jobrad.org). The legal framework is clearly defined including caps on the tax exemption for non-monetary remuneration.

In Austria the tax advantage for employees will be even greater as it is expected that private use of company bicycles will be fully exempted from income tax. This means that providers of company bicycle models are expected to set up shop in Austria like they did in Germany.

An example for an information leaflet on currently possible company bicycle models in Austria compiled by CycleCompetence member Vorarlberg can be viewed here (in German).

Photo credit: Parlamentsdirektion, Peter Provaznik

Posted on October 2, 2019