Company Bicycles: Tips and Tricks for the Self-Employed

With the lovely weather in Holland, many self-employed individuals are exploring the benefits of owning a company bicycle. Not only does it offer a sustainable and healthy commuting option, but it also comes with some attractive financial perks. Here’s everything you need to know about using a company bicycle as a self-employed professional.

Understanding the Work-Related Expense Scheme

Since the introduction of the "werkkostenregeling" (work-related expense scheme), company bicycles are no longer part of the old bicycle plan. This means that bicycles are treated like other work-related benefits, such as company parties and Christmas hampers.

Tax-Free Company Bicycle

If you’re self-employed and want to purchase a business bicycle tax-free, the total expenses for all work-related benefits cannot exceed 1.2% of your total income. However, bicycles can quickly become too expensive to fit within this limit.

Ownership and Depreciation

As a self-employed individual, you remain the owner of the bicycle on paper, and you can list it as an asset on your balance sheet. The bicycle will be depreciated over five years, which spreads out the cost and reduces your taxable income each year.

Using the Bicycle for Business and Private Purposes

Business Use

If you use the bicycle primarily for commuting to clients or business meetings, you won’t face any additional tax. The key is to ensure that the primary use of the bicycle is for business purposes.

Private Use

If you also use the bicycle privately, you need to account for the economic value of this private use as additional income. This involves calculating the number of private kilometers ridden and multiplying it by a per-kilometer rate, which includes costs like electricity, maintenance, repairs, depreciation, and insurance.

Employee Contributions

If you hire employees and they contribute to the cost of the bicycle, you should deduct their contributions from the economic value of the bike.

Simplifying the Process

Recent changes have made it easier for self-employed individuals to use a business bicycle or electric bicycle for both business and private purposes. The additional income tax for a bike is set at 7% of the bike's value. This means that 7% of the bike’s value will be added to your income, and you will be taxed on this amount.

Conclusion

The Netherlands are an excellent place for cycling and all the big Dutch cities, including Amsterdam, Rotterdam, Eindhoven, and Utrecht have wonderful bicycle facilities and infrastructure. So owning a company bicycle as a self-employed individual offers a range of benefits, from promoting a healthy lifestyle to providing tax advantages. By understanding the regulations and keeping track of your usage, you can maximize these benefits and enjoy a sustainable, cost-effective way to travel for business and leisure.