Company bikes have now become established in many companies, but does leasing also work with a racing bike? After all Racing bikes are sports equipment and are used for leisure activities - unless you are a member of a UCI WorldTeam. The good news is that even if you are a recreational cyclist, you have the option of leasing a racing bike as a company bike.
What is leasing?
Leasing describes a contractual relationship for the transfer of use. It does not matter whether the lease is for a racing bike, a car or another, usually mobile, object. There is a leasing provider who makes the leased object available, in our case a racing bike. There is also a lessee who uses the bike for a fixed contract term. Over the course of this contract term, often three years, the lessee pays a monthly instalment.
At the end of the leasing term, the racing bike still has a residual value. The lessee has two options. Either he terminates the contract and concludes a new lease for a new racing bike, or he takes over the bike at its residual value. Because of the second option, bicycle leasing is often regarded as a financing model. The lessee can be a private individual, but also an employer who provides the racing bike to an employee as a company bike.
Are there tax advantages to leasing a racing bike?
Depending on the structure of the road bike lease, there are tax advantages for the employer, the employee or both. If the bike lease is realised via a tax-incentivised salary conversion, savings of up to 40% are generally possible. In this case, you as the employee pay the leasing instalments, which are deducted in full from your salary. These can be compared with income-related expenses that you can deduct from your taxable income. Your gross salary is reduced and so is your income tax. A small downer in this consideration is that your pension and unemployment insurance contributions will also fall, and with them your benefit entitlements. If your employer subsidises the leasing instalments, this will increase your tax burden on the one hand, but on the other hand you can regard the road bike leasing as a kind of salary increase. And for the employer, these costs are deductible. There is also another, so-called non-cash benefit that you have to pay tax on. Because you also use the leased racing bike privately, a rule similar to that for a company car applies. However, while the 1% rule applies to a company car, only 0.25% of the gross list price has to be taxed each month for company bikes (more precisely: 1% of a quarter of the gross list price rounded down to the nearest €100). The gross list price is the new purchase value of the racing bike including VAT.
What tax benefits are there for employers and the self-employed?
For employers, tax-free scenarios can also arise if the bikes are transferred to business assets (but then only for business use). The bikes are then given to the employees and the costs can be deducted as business expenses. In this case, employees can still claim the commuter allowance. E-bikes are treated no differently to racing bikes and other bikes for tax purposes when leasing. Since 1 January 2020, self-employed persons have no longer had to pay tax on the private use of leased bikes or e-bikes. Self-employed persons and freelancers can claim the leasing instalments as fixed business expenses, which reduce the taxable profit and thus the tax payable. Only the VAT on the private withdrawal portion still has to be paid. If you are self-employed and entitled to deduct input tax, you can reclaim the VAT from the leasing instalments from the tax office. In addition, self-employed persons and freelancers can declare the applicable commuter allowance per working day.
What are the costs of road bike leasing?
The cost analysis is best visualised using an example. The following information is based on tax rates for 2022 and the typical conditions of a leasing contract (all information without guarantee). With regard to the tax rates, it should be noted that there are varying rates for church tax and health insurance contributions.
If you add up the net monthly costs over three years, the result is around €2900. If you want to take over the bike at its residual value, you will have costs of around € 3800, which corresponds to a saving of 24% on the original purchase price. This value will change due to the taxation of the non-cash benefit (negative) and any insurance and service payments for the leasing contract taken over by your employer (positive). If you intend to take over the road bike at the beginning of the leasing contract, make sure that you fix the residual value as favourably as possible.
What are the usual conditions for leasing contracts?
The standard terms and conditions include the term and a Fully comprehensive insurance. Comprehensive insurance should cover the Theft of both the bike and attachments as well as road accidents and falls. It also covers damage to the bike caused by vandalism and operating errors as well as a mobility guarantee. Annual inspections and wear and tear repairs can be booked as an option, which means higher leasing instalments. Most leasing providers offer similar packages here, but you should take the trouble to look at the details. For example, how high is the excess for fully comprehensive insurance or what specific checks are carried out during the inspection? In many cases, it's not just the bike that can be leased, but also various other items. Accessories. You should ask the respective leasing provider which accessories are exactly eligible for leasing.
How does the leasing of a racing bike work?
In most cases, you have to take the first step. Although there are already some companies where bike leasing is practised, the majority are still companies where it is not common practice. If your employer belongs to the first group, everything is fine. Ask the personnel department for advice. In the second case, you should find out about the various leasing providers and make specific suggestions to your employer. As a rule, the tax advantages should convince them. To conclude the leasing contract for your company racing bike, it is up to the person who ultimately acts as the lessee. When choosing your dream bike, your employer may want to have a say as a potential lessee because the list price of the racing bike has a significant influence on the amount of the leasing instalments. However, it should be very easy to reach an agreement here. The leasing providers usually work with a large number of dealers and do not impose any restrictions on your choice. As a rule, you really can choose the bike you want. You can also choose a racing bike when leasing.
Which bikes can be leased?
In principle, there are no restrictions here. From normal bikes to racing bikes, mountain bikes and cargo bikes through to e-bikes or e-MTBs, everything is possible, provided the leasing provider or the dealers cooperating with them have them in their range.
What are the advantages of road bike leasing?
In addition to the tax benefits already discussed in detail, road bike leasing also has a few practical advantages. At the end of the contract term, which is usually three years, you can easily switch to a new racing bike with a new leasing contract. You can choose from the latest models. On the other hand, you are also tied to your chosen racing bike for the duration of the contract. But if you are highly satisfied with your racer, you also have the option of purchasing it at a fixed residual value. Another advantage is the insurance and the mobility guarantee. If the bike is stolen or damaged in an accident, the leasing provider will provide a replacement.
What about the carbon footprint of road bike leasing?
People who cycle to work live healthier lives. Sport and physical activity have a positive effect on the cardiovascular system and general well-being. People who live healthier lives put less strain on the healthcare system and are therefore also more economically sustainable. However, it doesn't really matter whether the bike you ride to work is a leased or privately purchased racing bike. And this also applies to the calculation of CO2 savings. For a one-way journey to work of ten kilometres, the average CO2 saving compared to a car is 690 kilograms per year. In addition, as a cyclist you do not pollute the air with nitrogen oxides or particulate matter.
Which leasing providers are there for racing bikes?
There are now a number of leasing providers through which racing bikes can also be leased. These include Job bike, Business bike, Company Bike, Eurorad, Lease a Bike, My company bike and Bike leasing.
Leasing works for all bikes, including racing bikes
Fortunately, racing bikes are no exception when it comes to leasing as company bikes. Leasing racing bikes has a number of tax advantages that can lead to considerable savings, both when considering the running costs and when purchasing at a fixed residual value. Service offers such as insurance and maintenance are integrated or can be integrated into the leasing contracts. And for your own Health and the climate, cycling is the best solution anyway.
