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In the case of salary conversion, the employee receives a portion of the contractually agreed salary not in cash, but as a payment in kind for the period during which the company bike is made available. This means that a change is made by means of a supplementary agreement to the employment contract, in which the employee's future salary is reduced by a fixed amount (conversion rate) for the duration of the transfer of use. This then results in the tax and contribution benefit for the employee. In most cases, the imputed income is also subject to taxation. This is added to the monthly gross salary.

What does this mean exactly?

Gross monthly salary

+ taxation of imputed income

- Conversion rate

- All-round protection costs

= new gross monthly salary

- Taxes

- Taxation of imputed income

= net monthly salary

If you now compare the net monthly salary without the company bike with the net monthly salary with the company bike, you get the monthly costs for the company bike leasing.

Below are some explanations of terms.

Conversion Rate:

The conversion rate is the sum of the leasing rate and the cost of the selected all-round protection package, less any cost coverage by the employer The gross monthly salary is reduced by this conversion rate.

Taxation of the imputed income:

Depending on the form of the transfer by the employer, the use of the company bike is subject to taxation of the non-cash benefit. If a company bike is also provided for unrestricted private use as part of a salary conversion, the non-cash benefit must be taxed. The non-cash benefit from company bike leasing is calculated at a flat rate of 1% of a quarter of the gross list price (RRP) rounded down to a full €100, added to the taxable income and also taxed. This is also referred to colloquially as 0.25% taxation. The amount for the imputed income can be found in the calculation overview in the bike leasing calculator.

The leasing rate shown in the supplementary agreement to the employment contract does not correspond to the actual costs for your company bike.

The leasing rate is shown net and gross. If your employer is entitled to deduct input tax, the net leasing rate is usually offset against your gross monthly salary. This reduces your taxable gross monthly salary. Your taxes and social security contributions are reduced accordingly. If your employer is not entitled to deduct input tax, the gross leasing rate will be deducted from your gross monthly salary.

The conversion rate in the supplementary agreement to the employment contract does not take into account a possible subsidy from the employer.

Would you like to know exactly how much you can save? Then visit our calculator.

With salary conversion, you as an employee do not receive part of your contractually agreed salary in cash, but as a non-cash benefit for the period in which the company bike is provided.

This means that an amendment is made to the employment contract in which your future salary is reduced by a fixed amount (conversion rate) by mutual agreement for the duration of the transfer of use. This then results in a tax and contribution advantage for you as an employee. You can easily calculate your savings in our calculator.

You can also find out whether bike leasing is worthwhile in our article “Buying or leasing a bike: which is cheaper?”.

Company wheel leasing via salary conversion reduces your monthly gross income and therefore also the social security contributions for your pension. This is often seen as a disadvantage of employee leasing. However, the resulting losses are minimal. With a bike price of 3,000 euros, for example, the future pension entitlement is reduced by around 2 euros per month if the bike is leased with salary conversion over 36 months. Extrapolated, this would be a total of 468 euros less pension for the entire pension entitlement period. This amount is less than the average savings from a company bike. There is also the positive health aspect: according to current studies, regular cyclists are not only fitter and healthier, they also live longer.

If you receive your company bike as a salary supplement, the employer bears the entire cost on top of your salary. As there is no salary conversion in this case, social security contributions are not reduced. The pension is therefore also not affected.

The user selects one option each for theft & damage protection (incl. free Europe-wide mobility guarantee), inspection and wear and tear and thus configures the all-round protection package according to their individual requirements. Accordingly, each all-round protection package includes theft and damage protection as well as a budget for inspection and wear and tear.

Read the article “Bike leasing and repairs” to find out who pays for repairs, what services are covered, and how to respond correctly.