Bike allowance and company bikes in 2024: Important updates

Since 1 January 2024, the tax-exempt bicycle allowance was raised from EUR 0.27 per kilometer to EUR 0.35 per kilometer. 

At the same time, two additional conditions have been introduced that should not be overlooked:

1. To prevent abuse, an annual cap on the tax exemption has been introduced

The ceiling is EUR 3,500 on an annual basis. If the ceiling is exceeded, the balance is subject to withholding tax and social security contributions. At tax return level, this ceiling is checked again, for example if the employee has worked for several employers.

In other words, someone who commutes to the office by bicycle every working day can ride up to 47 kilometers round trip tax-free, considering 210 days of commuting. The likelihood that an employee reaches this limit will therefore be relatively limited. If the employee covers more kilometers, they can still receive a bicycle allowance, but it will no longer be tax-free.

Example:

Peter lives in Antwerp and cycles to work in Brussels by speed pedelec once/week on average. The round-trip distance is 96 kilometers. Suppose Peter cycles to work 40 times a year by bicycle, the bicycle allowance will be: EUR 1,344 (96 x 40 x 0.35), thus staying below the ceiling of EUR 3,500. Suppose Peter rides the bike more, say 150 days/year, he will receive an allowance of EUR 5,0403 from his employer (96 x 150 x 0.35) but only EUR 3,500 of this will be exempt.

2. In addition, the legislation now also specifically provides for the employee to make use of the statutory flat rate for personal commuting expenses in the tax return. Only in this case can the bicycle allowance be exempted from taxes. Thus, the employee is no longer allowed to prove actual professional expenses for their trips.

NOTE: this condition also applies to bicycles provided by employers to their employees (often through a cafeteria plan or a mobility plan). Employees who can order a bicycle through their employer and use it for commuting can only exempt the cost of this bicycle from taxes and social security contributions to the extent that they do not prove their actual costs in the tax return.

To check this at declaration level, from income year 2024, it will be mandatory to report both the amount of the bicycle allowance and the provision of the company bicycle on tax form 281.10.

The bicycle allowance increase, in combination with the earlier extension of the bicycle allowance to all sectors in the private sector (see below), aims to incentivize the use of bicycles as a mode of commuting.

However, for employers who decide to increase the bicycle allowance, a financial compensation is provided via a temporary tax credit for the bicycle kilometers during the period from 1 January 2024 to the end of 2026 (which was also created when collective agreement No 164 was introduced). For more information on its calculation and allocation, you can always contact our Reward team.

The extension of the bicycle allowance to all sectors in the private sector not already covered by other collective bargaining agreements was introduced on 1 May 2023 by collective bargaining agreement No. 164.

Employers covered by a sector that had not yet concluded a sectoral or company collective agreement on bicycle allowances were required through this collective agreement to grant a bicycle allowance, the amount of which was EUR 0.27 for 2023. This amount was indexed to EUR 0.28 on 1 January 2024.

Previously, the bicycle allowance was not mandatory for employers unless there was a collective bargaining agreement in the sector that provided for it or if the employer voluntarily granted it to its employees.

Because collective agreement No. 164 is supplementary, it does not affect collective agreements that were already previously concluded at sector or company level. Thus, pre-existing collective agreements will continue to apply.

For example, if in a specific sector (joint committee) something has already been settled around the conditions and amount of the bicycle allowance, these provisions will still apply - even if the amount would be lower than what is stipulated in collective agreement no. 164. 

Of course, this does not alter the fact that an employer can always decide to give more than what the sector prescribes, provided they still respect the general rules (annual exempted ceiling of EUR 3,500 and with a maximum of EUR 0.35 per kilometer).

The increase in the maximum exempt amount of the bicycle allowance does not automatically lead to an increase in the bicycle allowance for all employees. The amount applicable to the employee depends on the collective bargaining agreement applicable in their sector. Moreover, other conditions may also apply.

• As cited above, it is possible, for example, that within a given sectoral or company collective agreement, the payment of a bicycle allowance is linked to a fixed amount. This amount, subject to any changes in the sectoral or company collective agreement, will remain applicable on 1 January 2024. For example, for Joint Committee 200, the bicycle allowance is currently 0.20 cents per km with a maximum of 40 km per day. This amount will be increased to EUR 0.27 from 1 July 2024 but will not be indexed.
• On the other hand, it is also possible that the sectoral or company collective agreement has linked the increase of the tax-free bicycle allowance to the maximum exempted amount. In this case, employers within this sector will have to increase the bicycle allowance to the maximum amount of EUR 0.35 per kilometer with effect from 1 January 2024.
• Sectors where nothing has yet been specifically regulated for the bicycle allowance will not be obliged to apply the increased bicycle allowance exemption of EUR 0.35 on 1 January 2024. These sectors will, in principle, be included in the scope of CLA No. 164.

The CLA No. 164 stipulates that the basic amount of EUR 0.145 per kilometer is indexed every year according to the mechanisms applicable to the social and tax exemption for the bicycle allowance, and this is therefore not the same as the maximum amount of the bicycle allowance.

In 2023, the indexed bicycle allowance under CLA No. 164 was thus EUR 0.27 per kilometer travelled by bicycle. From 1 January 2024, this bicycle allowance will be EUR 0.28 per kilometer travelled by bicycle. This is thus lower than the general maximum amount of EUR 0.35 per kilometer. 

The maximum amount a company is allowed and able to intervene depends on several factors, a result of various legislative initiatives taken since 2023 to further encourage bike commuting.

In addition, it may also be interesting to review your conditions regarding the granting of a bicycle allowance in combination with the provision of a lease.

Because if you, as an employer, make a bicycle available, whether through a cafeteria plan or not, from 1 January 2024 the provision of the bicycle will only be exempt if the employee does not prove any actual costs in the tax return. Moreover, the company bicycle will have to be reported on tax form 281.10.

Want to know more? Our Reward team will be happy to help you.
 

Authors: Céline Maurissen and Kathleen Veugelen