Bike leasing: How does salary deduction work for me as an employee?
Here’s how salary conversion works with the company bike: Your employer leases the bike and deducts the monthly payment directly from your gross salary. This means you pay for your chosen bike out of your gross pay rather than your net pay. As a result, your taxable income and the portion subject to social security contributions decreases, allowing you to save on taxes and social security contributions. You’ll only have to pay taxes on a small monetary benefit under the 0.25 percent rule. The benefit for you: All in all, this makes cycling significantly more affordable than buying a bike outright. And Lease a Bike has also made provisions for exceptional circumstances such as parental leave or long-term illness.
Important note: This article explains salary conversion for company bikes from the employee’s perspective but does not replace tax or legal advice. It’s best to clarify the specific details with your tax or legal advisor.
The most important points at a glance.
How does salary conversion work? You forgo a portion of your gross salary equal to the monthly payment. In return, your employer provides you with the bike.
Who signs the lease agreement? Your company. You receive the bike under a loan agreement.
Why does this save me money? Because your gross income—which is subject to taxes and social security contributions—decreases.
How much do I save? Up to 40% compared to buying the bike outright. The company bike lease calculator shows your specific savings.
What do I have to pay taxes on? Only the monetary benefit: 1% per month of one-quarter of the manufacturer’s suggested retail price, rounded down to the nearest 100 €.
Can my employer reduce the costs? Yes, with a subsidy or as a salary bonus. With a salary bonus, the monetary benefit is eliminated entirely.
Is there a catch? A small one: Your pension entitlement decreases slightly—roughly by about €2 per month for a €3,000 bike.
What happens during parental leave or a long-term illness? The payment protection plan covers the installments for up to twelve months, provided the contract has been in effect for at least six months.
What does salary deferral mean in the context of a company bike lease?
Salary conversion is the key savings factor in company bike leasing. The principle behind it is quite simple: You forgo a portion of your gross salary, and your employer provides you with a company bike in exchange. Part of your cash salary is thus converted into a benefit in kind, which ultimately saves you money. The amount withheld is called the conversion rate. It consists of the lease payment and the selected comprehensive coverage.
Important to understand: It is not you, but your company that enters into the lease agreement with the leasing company. You, in turn, receive the bike under a loan agreement - usually as a supplement to your employment contract. This agreement stipulates that you may use the bike for both personal and business purposes and outlines how the payments are financed. Therefore, without an offer from your company, you cannot obtain a company bike through salary conversion.
The key difference from a private purchase lies in the financing. If you buy a bike on your own, you pay for it out of your net pay - that is, out of money that has already been taxed. With payroll deduction, however, the installment comes out of your gross pay. In short: You pay part of the installment with money that would otherwise have gone to the tax office and social security funds - a major advantage.
Learn more: To find out how the model works overall, read the article “What Is a Company Bike Lease?”
How does salary conversion work, step by step?
The process for getting a company bike is mostly digital and almost always follows the same pattern:
Register: Your employer shares a registration link that you use to sign up on the Lease a Bike portal.
Receive an order code: Once your company approves your request, you’ll automatically receive a unique order code.
Choose a bike: Use the code to select your preferred bike at a local authorized dealer. You’re free to choose the brand and bike type; our dealer locator shows you nearby stores.
Sign the lease agreement: You and your employer sign it digitally in the portal.
Start the conversion: From now on, the monthly payment will be deducted from your gross salary. Any employer contribution will reduce your share.
Use the bike: You can use the bike for both personal and work purposes, generally for 36 months. After that, you can purchase it, return it, or lease a new one using your order code.
Good to know: The conversion must be agreed upon in advance. Wages that have already been earned cannot be converted retroactively. That’s why you should sign the lease agreement before the first installment is deducted.
How much will I save through salary deferral?
How much you save depends on your personal situation. Two factors interact here: First, your gross taxable income decreases, which reduces your taxes and social security contributions. Second, personal use is taxed only as a small monetary benefit. Four factors in particular determine the extent to which both of these factors apply:
Your tax rate: The higher your personal tax rate, the greater the benefit you’ll gain from the conversion.
The price of the bike: The absolute benefit is particularly significant for high-end e-bikes. After all, a good commuter pedelec can easily cost between 3,000 and 5,000 euros.
An employer subsidy: If your company covers part of the monthly payment, your own share decreases even further.
Your company’s input tax deduction: If your employer is eligible for an input tax deduction, you generally only convert the net lease payment. This increases your savings.
The result: Compared to buying, you save up to 40 percent with Lease a Bike. The best way to calculate your exact savings is to use our bike leasing calculator.
What exactly is a monetary benefit?
The personal use of a company bike is a taxable benefit—though the amount is quite small. Since 2020, the 0.25 percent rule has applied to bicycles and e-bikes. Officially, this means that 1 percent of a quarter of the manufacturer’s suggested retail price—rounded down to the nearest 100 euros—is applied each month.
The following calculation illustrates this: If the recommended retail price of your bike is 3,000 euros, a quarter of that is 750 euros, rounded down to 700 euros. One percent of that amounts to 7 euros per month. Your employer adds this amount to your gross pay for tax and social security contribution calculations. It remains the same throughout the entire term and also covers your commute to work. The recommended retail price, including sales tax, is the determining factor—not the actual purchase price paid. A discount at a specialty retailer therefore does not reduce the monetary benefit.
Different rules for S-pedelecs.
However, this applies only to pedelecs with a top speed of up to 25 km/h, which are classified as bicycles under traffic laws. S-pedelecs with a top speed of up to 45 km/h, on the other hand, are classified as motor vehicles and require an insurance plate and a driver’s license. For tax purposes, they are treated like electric company cars, which means that commuting to work is subject to additional taxation.
Salary deferral, subsidy, or salary bonus: What's the difference?
Salary deferral, employer subsidy, or salary bonus—all three options lead to a company bike, but they differ in how they’re financed:
Salary deferral: The standard option. You pay the installment yourself; it’s deducted from your gross salary. You pay taxes on the monetary benefit.
Salary deferral with a subsidy: Your employer covers part of the installment—for example, through the “Fairbetrag” program. In this case, your company passes on the social security contributions it saves to you. The taxable benefit generally remains.
Salary supplement: Your employer provides you with the bike in addition to the wages you’re already owed. In this case, the provision of the bike is tax-free, and no monetary benefit arises. However, this does not apply to S-pedelecs.
Tip: Your employer determines which option is available at your company. It’s best to check directly with your HR department to see if a subsidy or a salary supplement is offered. Even a small subsidy can reduce your monthly expenses.
What should you consider before opting for deferred compensation?
36 months is a long time - after all, a job change, parental leave, or illness can happen at any time. That’s why you should be aware of the following points before deciding to lease a company bike through salary conversion:
Eligibility: Generally, employees subject to social security contributions whose employer offers this program are eligible to lease a bike. Your gross income must cover the monthly payment, so part-time jobs are usually excluded. Read more in the article “For Which Types of Employment Is Company Bike Leasing Available?”
Pension: Because your gross income subject to social security contributions decreases, your pension entitlement will also be slightly lower. To find out exactly how much this affects your pension, read the article “How Does a Company Bike Lease Affect My Pension?”
Parental Leave and Long-Term Illness: If continued pay is no longer provided—for example, after more than 42 days of illness while receiving sick pay—the missed payment protection kicks in. You get to keep the bike, and the payment plan resumes after the interruption. For details, see the article “What Happens to the Company Bike During Parental Leave or a Long-Term Illness?”
Changing Jobs: If you leave the company before the 36 months are up, you don’t automatically lose the bike. There are four options in total, including taking ownership of the bike or transferring the contract to your new employer following a credit check.
By the way: We will check well in advance of the contract’s expiration to see if a purchase offer is possible. If you decide to purchase the bike, Lease a Bike Deutschland GmbH will report any potential monetary benefit as income in accordance with Section 37b of the German Income Tax Act (EStG). This will not result in any additional tax costs for you. There is no entitlement to a purchase offer or to the purchase of the bicycle.
Checklist: Am I ready for salary conversion when leasing a company bike?
Does my employer offer a company bike lease through payroll deduction?
Am I employed in a position subject to social security contributions? (A “minijob” usually doesn’t qualify.)
Do I understand that the payment is deducted from my gross pay, not my net pay?
Do I know how the monetary benefit is calculated according to the 0.25 percent rule?
Is there an employer subsidy or a salary bonus?
Am I riding a pedelec or an S-pedelec? (S-pedelecs are taxed differently)
Did I sign the lease agreement before the first payment?
Am I aware that the salary conversion will slightly reduce my pension entitlement?
Have I calculated my benefit using the company bike lease calculator?
Our author
Anna Veldtrup
Anna Veldtrup has been a team leader in the Customer Service and Claims Management department at Lease a Bike since 2024, and she and her team work every day to ensure the highest level of customer satisfaction and smooth operations. She loves nothing more than riding her gravel bike in nature.