Bicycle benefit – what the new tax rules mean

Bicycle benefit – what the new tax rules mean

Here we summarise important information on the new regulations regarding employer-provided bicycles which may be useful for employers to know.

To encourage more people to commute by bicycle, the government has introduced new rules regarding the taxation of employer-provided bicycles. The new regulations apply from 1 January 2022 and mean that bicycles provided for employees by their employers can, subject to certain limits, be a tax-free benefit for the employee. The tax exemption applies for bicycles up to a market value of SEK 15,000 and for up to SEK 3,000 in taxable benefit per tax year.

The tax relief applies only to push bikes and electric bikes and only if the benefit is offered to all permanent staff on equal terms at the workplace in question. The benefit cannot be applied to scooters or electric scooters. Sole traders and partners in trading partnerships cannot take advantage of the tax relief.

Offering staff a tax-free bicycle benefit

It is completely voluntary for companies to offer a bicycle benefit. It is the company that formulates its policy and decides how a bicycle benefit is to be structured. The most common arrangement today is where the company offers its employees the opportunity to hire bicycles via the company’s leasing supplier. In practice this means a taxable bicycle benefit and a salary exchange, i.e. the employee pays for their bicycle benefit with a net and/or gross salary deduction. The term of the lease is usually three years and afterwards the employee can either purchase their bicycle or exchange it for a new bicycle and sign a new lease.

The new law will affect how the gross salary deduction is calculated and means up to SEK 3,000 of the benefit value per year (SEK 250 per month) is not subject to taxation. Employers therefore need to review their current policy and update it in accordance with the new regulations. It is also important to contact your bicycle supplier to make sure that the information they provide as a basis for salary calculations follows the new regulations and and ensure that this is applied from the correct date if you have delayed billing.

Applies to pool bike schemes too

The new law also gives employers an opportunity to offer a bicycle benefit by providing a so-called pool bike scheme at the company, where employees can check out and hire bicycles for private use for short periods free of charge. This version of the benefit also requires that there is a clear policy that regulates how the scheme should work in practice at the company, that sets out the best way of administering the scheme at the company and that clarifies the rules for employees. In this case too, the benefit must be made available to all permanent employees at the company for use on equal terms.

If you need any advice or help formulating a policy for bicycle benefits, please contact us at Azets.

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