For the time being, the employee has to pay income tax on the employment bicycle at the fair value of the benefit.
However, the new employment bicycle benefit, which will take effect from the beginning of 2021, is a new income tax-free income up to a maximum of EUR 1,200 per year.
But how much of a future benefit is really beneficial?
According to two indicative examples, even with an ordinary employee, the benefit can easily rise to more than € 450 per year.
If the cost of an employment bicycle is spread over three years, income tax-free cycling can be purchased for a maximum of as much as EUR 3,600.
Read more: Pyöräliitto disappointed with the promised income tax exemption of 750 euros for employment bikes - “should be 1500 euros a year”
According to the examples of the wheel association's occupational wheel material:
If the bike and equipment total 900 euros, the tax value is about 52 euros / month.
With an income tax rate of 20%, the tax benefit would be about 125 euros per year, ie a total of about 250 euros for two years.
If the bike and equipment total EUR 2,400, the tax value is approximately EUR 109 per month.
With an income tax rate of 35%, the tax benefit would be approximately EUR 459 per year, for a total of approximately EUR 918 for two years.
That is, the higher the percentage, the greater the direct economic benefit from the employment wheel.
Leasing periods are defined in the calculations as two years.
In financial considerations, it should also be noted that the leasing company's office and handling costs can be reduced before the benefit is valued if the company acquires the benefit through leasing.
At present, it is also unclear whether or not the residual lease payment is covered by the tax benefit if the employee redeems the bike from the leasing company.
Read more: Executive Director of the Finnish Bike Federation: The tax exemption for the employment bike must be increased to 3,400 euros!
When talking about the new tax-free benefit, the question naturally arises as to who can ultimately receive the employee bike benefit?
The short answer to this is: Employee or entrepreneur, but not a business name entrepreneur.
Also, the tax advantage is not split from one's own bicycle, ie there must always be one company in one way or another - either as a leasing model or as a direct supplier of the bicycle.
Of course, the unemployed or students, for example, are not entitled to an employment bike benefit either.
This is how the value of the bike benefit is calculated
If the employer acquires an employment bicycle under a leasing contract, the in-kind value of the bicycle benefit in the employee's taxation is the cost to the employer (monthly lease payment) less the office and handling costs paid to the leasing company.
If the employer owns an employment bicycle, its value in kind for employee taxation is calculated by dividing the purchase price of the bicycle by the assumed years of use of the bicycle.
The interest on the principal (the price of the bike) is added to the value obtained.
This gives the annual cost of capital.
If the employer also pays for the maintenance, repair or other similar costs of the bike, the costs incurred are added to the cost of capital.
The amount received is the annual value of the benefit.
The value used in the monthly payroll calculation is obtained by dividing the annual value by the months of use.
The amount of interest is calculated in subsequent years by deducting from the capital the share of depreciation taxed in the previous year.
When the calculated useful life of the benefit expires, the cost of capital for the acquisition is eliminated.
Thereafter, the value of the benefit is only affected by operating costs and capital costs for maintenance.
Source: Cycling Association