Bike Leasing: What legal considerations do employers need to be aware of?
With a company bike lease, you, as the employer, are the lessee. You enter into the lease agreement with the leasing company and provide the bike to your employees through a loan agreement. Legally, four key points are particularly important: tax requirements, a proper salary conversion, clear participation rules, and solutions for illness, damage, or resignation. Your advantage: Many of these scenarios are already covered as standard with Lease a Bike.
The most important points at a glance.
Who is the contracting party with the leasing company? Your company. Your employees receive the bike under a loan agreement.
How is personal use taxed? Through salary conversion, with 0.25% of the list price per month treated as a taxable benefit.
And what about the salary bonus? If you provide the bike in addition to the employee’s salary, the provision is tax-free. This does not apply to S-pedelecs.
What are the limits under labor law? The minimum wage must be maintained. Companies bound by collective bargaining agreements generally need a basis in the collective bargaining agreement.
Who is eligible to participate? You determine that - using objectively justified, uniform criteria.
Does the works council have a say? Co-determination rights may apply when designing the program. It makes sense to involve them early on.
Who pays in the event of illness or parental leave? Payment protection - for up to twelve months. The prerequisite is that the contract has been in effect for at least six months.
And if employees resign? There are four options: change of user, termination by mutual agreement, change of employer, or return of the vehicle.
As an employer, what contracts do you enter into when leasing company bicycles?
With company bike leasing, there are two levels of contracts, and both are handled through you:
Lease Agreement: Your company enters into this agreement with the leasing company, typically for 36 months. This makes you the lessee, and you - not your employees - are responsible for paying the installments.
Assignment Agreement: The assignment agreement is usually a supplementary agreement to the employment contract. It specifies that employees may use the bike for both personal and business purposes, how the payments are financed, and whether you provide a subsidy.
It’s also best to outline in this agreement how the bike is to be secured, how damage is to be reported, and what applies in the event of illness, parental leave, or resignation. To learn more about how the model works overall, read the article: What Is Company Bike Leasing?
Important: A purchase price must not be guaranteed in either contract. To ensure that the company bike is treated as a lease for tax purposes and not as a disguised installment purchase, the contracts must comply with the requirements of the so-called Leasing Decree. Instead, we’ll check in a timely manner whether a purchase offer is possible. We’ll send the offer by email no later than three months before the contract ends. There is no entitlement to a purchase offer or to the acquisition of the bike.
What tax rules apply to you as an employer?
How a company bike is treated for tax purposes depends on how it is financed:
Salary deduction: The lease payment is deducted from your gross salary. You report the personal use as a non-cash benefit on your pay stub. The 0.25 percent rule applies here. 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. This covers the commute to work.
Salary supplement: If the company provides the bike in addition to the salary you are already owed, it is tax-free (Section 3 No. 37 of the German Income Tax Act (EStG)). In this case, no monetary benefit is considered to have been provided.
Salary conversion is generally recognized for tax purposes if two conditions are met: Your company is the lessee, and the conversion was agreed upon under labor law for the future. The details can be found in the state regulations regarding the provision of (electric) bicycles. This article explains the details of how the conversion works: How does salary conversion work with the company bike?
Different rules apply to S-pedelecs. Under traffic law, pedelecs with a top speed of up to 25 km/h are classified as bicycles, whereas S-pedelecs with a top speed of up to 45 km/h are classified as motor vehicles. They require an insurance plate and a driver’s license, and for tax purposes, they are treated like electric company cars. Commuting to work is also subject to additional taxation, and the tax exemption for the salary supplement does not apply to them.
By the way: The final takeover also has tax implications. After three years, the tax authorities apply a flat residual value of approximately 40 percent of the original manufacturer’s suggested retail price. If the purchase price is lower than this, a monetary benefit may arise. Lease a Bike Deutschland GmbH handles this taxation in accordance with Section 37b of the German Income Tax Act (EStG). This results in no additional tax costs for users.
What do you need to keep in mind from a labor law perspective regarding deferred compensation?
Salary conversion affects the agreed-upon compensation. Therefore, certain limits apply:
Maintain the minimum wage: The right to the statutory minimum wage remains in effect, so the conversion must not arbitrarily reduce the remaining compensation. For a “minijob” paying 603 euros per month, there is no leeway for a three-year installment plan. You should also check the remaining pay for apprentices with low wages.
Check the collective bargaining agreement: If you are covered by a collective bargaining agreement, components of pay covered by the agreement can generally only be deferred if the agreement permits it. In some industries, company bike leasing is already regulated by collective bargaining agreements. For civil servants, participation depends on whether the employer has made the offer available.
Provide transparent information: The conversion reduces the gross income subject to social security contributions. As a result, pension entitlements are also slightly lower - roughly 2 euros per month for a 3,000-euro bike. It is therefore best to inform your employees of this fact before they sign the contract.
How do you determine, in a legally compliant manner, who is eligible to lease a company bike?
As an employer, you determine who is eligible to participate in your company bicycle leasing program. In general, employees subject to social security contributions - whether full-time or part-time - are eligible, as long as their gross pay covers the monthly payment. There are no legal requirements for specific situations such as probationary periods, fixed-term contracts, or apprenticeships. Each company governs these cases on its own.
Your criteria should be objectively justified and applied equally to everyone. This is required by the principle of equal treatment under labor law. Furthermore, part-time and fixed-term employees must not be treated less favorably without an objective reason (Section 4 of the German Fixed-Term Employment Act (TzBfG)). If in doubt, have a legal review conducted to determine whether, for example, excluding short-term fixed-term contracts is justified. The article “For Which Employment Relationships Is Company Bike Leasing Possible?” outlines which employee groups are generally eligible.
Good to know: If you have a works council or staff council, it’s best to involve them early on. When designing such a benefit, co-determination rights may be affected - for example, regarding eligibility criteria or subsidies. The rules can be set forth in a binding manner in a works agreement or service agreement.
Who bears the risk in the event of damage, theft, or loss of wages?
As a lessee, you remain liable to the leasing company. This applies even if a bike is stolen or your salary deferral is paused. With Lease a Bike, these risks are therefore covered:
Damage and theft: Every Lease a Bike company bike comes with comprehensive coverage for theft and damage through our partner Allianz - generally with no deductible. Employees handle the claims process themselves: They report the incident through their authorized dealer on the Lease a Bike portal. Your company is only actively involved in exceptional cases.
Illness and Parental Leave: If continued pay is discontinued, the missed payment protection covers the lease payments for up to twelve months. This applies, for example, after more than 42 days of illness while receiving sick pay or during parental leave. The prerequisite is that the contract has been in effect for at least six months. You report the interruption via the Lease a Bike portal, ideally before the interruption begins.
Sometimes the payment protection doesn’t apply because the contract is still too new or the interruption lasts too long. In that case, we’ll work together to find a solution, which may even include returning the bike at no cost to you. Read more in the article: What Happens to Your Company Bike During Parental Leave or a Long-Term Illness?
There are two additional points you should keep in mind. First, theft protection only applies if the bike was secured with a standard, brand-name lock - unless it was stored in a locked room. This requirement must therefore also be included in the loan agreement. Second, a bike used for work purposes may be considered a work tool. In that case, additional inspection requirements under occupational safety laws may apply.
What happens when employees leave the company?
If the employment relationship ends before the 36 months have elapsed, the lease agreement initially continues, since your company is the contracting party. To ensure you are not left stuck with the payments, there are four options:
Change of User: You transfer the bike to another employee for the remainder of the term and handle this internally - for example, through a supplemental agreement.
Early termination by mutual agreement: The contract is terminated for a valid economic reason. The departing employee may take ownership of the used bike.
Change of employer: Following a successful credit check, the contract is transferred to the new employer.
Return: If none of the above options apply, the bike is returned to your company. We will then handle the next steps on a case-by-case basis.
The same procedures apply when you retire or become self-employed. You don’t need to cancel anything at the end of the regular contract term, as the lease agreement ends automatically after 36 months. After that, you can choose to keep the bike or return it, if possible; pickup is free of charge. Good to know: Alternatively, you can use your existing order code to lease a new bike. For more information on the lease term, read the article: How long is the contract term for company bike leasing?
Important note: This article outlines the legal basics but does not replace tax or legal advice. It’s best to consult your tax or legal advisor to clarify the specific details applicable to your company.
Checklist: Is your company bike lease set up legally correctly?
Is your company a lessee?
Is there a lease agreement for each bicycle?
Does the lease agreement specify the deferred compensation amount, employer contribution, security obligations, and reporting procedures?
Is a buyout price guaranteed in any of the agreements?
Is the remaining compensation after the deferral above the minimum wage?
Does your collective bargaining agreement permit deferred compensation if you are bound by such an agreement?
Are your eligibility criteria objectively justified, consistent, and documented?
Have you involved the works council or employee representative committee?
Does your pay stub correctly report the monetary benefit and treat S-pedelecs separately?
Do you report parental leave and long-term sick leave in a timely manner via the Lease a Bike portal?
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.