Hanno Nüsslein was a successful triathlete in the medium and long distance, and after the age of 50, he has once again thrown himself intensively into his demanding hobby. With a training and nutrition concept - as well as high-quality equipment. The time trial bike from the mail order company was supposed to cost an impressive 9000 euros. As it was a mail-order bike, the price was not negotiable at the local dealer. So what could he do?
The solution was quickly found for Nüsslein: "My employer works with a leasing provider that offers the brand I want. To be honest, I didn't even calculate whether it would cost me anything per month or how much money I would ultimately save." Shortly after the order was placed, the desired Aero machine was delivered to his doorstep fully assembled. The payment is made in small instalments by waiving around 250 euros gross per month from his salary instead of a one-off payment of 9000 euros.
Bike leasing by means of salary conversion
The basic model of the procedure is called "salary conversion". The employer leases a bike for their employee and deducts at least part of the costs from their salary. In contrast to the employee's gross salary, the employer does not have to pay social security contributions on the leasing instalments. This is of course extremely advantageous for him. The employee also saves on his social security contributions and - thanks to the lower salary - also on tax. At first glance, a win-win situation!
I was simply looking for a top competition bike for a limited time and with little stress. - Hanno Nüsslein, triathlete
Of course, the leasing provider also benefits: it receives commission from the bike dealer and can occasionally influence the leasing instalments. In addition, insurance is taken out as the employer signs the leasing contract and only allows the employee to use the bike. It is understandable that the employer and employee do not want to risk a dispute over stolen or damaged bicycles. For this reason, all leased bikes are comprehensively insured, from fully comprehensive cover to wear parts and mobility insurance.
The Aero-Waffe is not a classic "company bike" for commuting to work. However, this is completely legal with bike leasing. A few years ago, politicians decided to treat bicycles in the same way as company cars for tax purposes. Company bikes are now even cheaper than cars, as private use is only taxed minimally. The state subsidises the use of bicycles by forgoing revenue. However, this leads to losses in tax revenue and social insurance. This is a purely political decision, similar to the lower taxation of diesel or aviation petrol.
Company bike leasing - racing bikes can also be leased
The services of leasing companies and insurers are cost-intensive. If you add up all the costs for the bike and the insurance during the leasing period, which is usually three years, the leased bike is considerably more expensive than a purchased one. Nevertheless, the model is attractive due to the government's foregone income.
According to the Two-Wheeler Industry Association, 70 to 80 per cent of expensive e-bikes are leased, and this trend is on the rise. Road cyclists, on the other hand, are more cautious. In a recent survey by our sister magazine TOUR, only 14 per cent of readers stated that they had leased their bike. This could be related to some of the peculiarities of the racing bike as a piece of sports equipment: Maintenance contracts and various types of insurance, which can be useful for similarly priced e-bikes and are part of leasing, have not been common for racing bikes until now.
Only a quarter of TOUR readers have insured their bike at all, mostly against theft. A racing bike is easy to secure. Many cyclists do a lot of servicing and repairs themselves. The insurance services offered by leasing providers are therefore less important. In addition, racing cyclists like to optimise their equipment, for example with different wheels, a different saddle or handlebars. However, the hire bike must be returned in its original condition.
Does service leasing make sense now?
Using company leasing for a vehicle can still be a good deal - if service options or wear and tear insurance are interesting, if the purchase price "in one go" would be too big a chunk or if the employer (as is often the case) covers insurance and part of the instalments. But even if the savings rate in the providers' online calculators sometimes flashes as seductively as the big "SALE!" signs: It's worth taking a closer look, and if in doubt, a tax advisor can help with the maths.
Our triathlete Nüsslein takes a very pragmatic view of his 9,000 euro bike: "I simply wanted a first-class competition bike for a limited time and with little effort. That's exactly what the deal seems to offer." He does not yet know whether he will buy or collect the bike at the end of the leasing contract. "That depends on the offer," he says, "and I'll probably do the maths a bit more carefully than when I ordered it."
How does service leasing work now?
Four parties are directly involved in leasing: a leasing company, an authorised dealer, the employer and the employee - in this case the ambitious triathlete.
- The employer cooperates with a leasing company whose authorised dealer carries the desired bike brand.
- The employee selects the bike of their choice from an authorised dealer (or even a consignor). The employer concludes a contract with the leasing company for this selected bike. He - and not the cyclist himself - is the lessee.
- The employer provides the employee with the bike for use, usually for a contract period of 36 months. The costs for the lease and the compulsory fully comprehensive insurance are deducted in full or in part from the gross salary. The employee saves on taxes and social security contributions due to the lower salary. This is the real advantage of company bike leasing.
- The employee can use the bike for private or professional purposes as they wish. Exclusive leisure use is also perfectly legal. This is listed as a "non-cash benefit" in the payslip and must be taxed - however, for an €8,000 bike, only €20 per month would be taxable.
- Shortly before the end of the contract term, the employee receives a purchase offer on request at a flat-rate residual value, usually 15 to 18 per cent of the new list price. If the employee does not wish to take possession of the bike, the leasing company will arrange for it to be collected. The bike is returned in "proper condition", i.e. with normal wear and tear.
Watch out! Horses' feet & small print
- Pension contributions are reduced due to the lower gross salary, which leads to a reduction in the pension. With an average life expectancy, this can amount to a four-figure sum. The short-time working allowance and daily sickness allowance will also be reduced.
- The instalments are calculated on the basis of the recommended retail price for the bike. The dealer has little room for discount as he has to pay commission to the leasing company.
- The comparison calculations between leasing and purchasing usually include insurance to varying degrees. However, not everyone takes out insurance for their racing bike.
- Some leasing bike insurance policies exclude participation in competitions.
Bike leasing: the concrete numerical example
The number of leasing providers is constantly growing, but their calculations are similar. We have calculated the approximate costs for two fictitious racing cyclists using an online leasing calculator and an annuity calculation tool.
The first cyclist earns the average gross salary in Germany of 4,100 euros per month, has two children and is in tax class three. The desired bike costs 5200 euros. The leasing bike reduces the gross income by around 150 euros and the net income by 100 euros per month.
If the employer covers the cost of insurance (820 euros in the example), the net cost of the bike purchased at the end of the leasing period is 4460 euros. For the conventionally purchased bike, the online calculator simply adds the obligatory insurance to the leasing and arrives at 6020 euros. This corresponds to a saving of 26 per cent on leasing. If you disregard the insurance, you still save 740 euros.
As controversial as these basic assumptions is the fact that pension losses are neglected: The leased bike roughly reduces the pension by 4.30 euros per month. This small sum adds up to around 1000 euros over the cyclist's lifetime - an amount that could be added to the favourable leasing price.
Bike leasing effectively costs a pension
The second cyclist is a high-earning, childless single person in tax class one. He earns 8,000 euros gross per month and would like to lease an equally expensive bike. With the leased bike, he will have 234 euros less gross and 135 euros less net per month. The calculator spits out a total price of only around 6000 euros for the bike taken over at the end of the lease, which theoretically means a saving of 2000 euros (without taking insurance into account). Here, too, the savings are clearly relativised if the buyer is allowed a retirement period of 20 years: In this case, he loses almost 1600 euros in pension.
Interview on the subject of company wheel leasing
The company Jobrad is the pioneer of company bike leasing in Germany. Company spokeswoman Lara Burger answers our questions.
MYBIKE: Service bike leasing is the result of political decisions. Was Jobrad itself involved?
Lara BurgerThe founder of Jobrad, Ulrich Prediger, is actually the inventor of this option. At the time, the aim was to give bicycles at least the same tax advantages as the company car privilege for cars. This required a great deal of dialogue with the relevant authorities and politicians. However, he achieved more: today, bicycles are even better taxed than company cars.
That sounds tempting for employees. Nevertheless, some trade unions have reservations about deferred compensation. Why is that?
In companies that are bound by collective agreements, the collectively agreed wage must not be undercut by company wheel leasing, as this would undermine the collective agreement. However, more and more sectoral collective agreements are now taking into account the framework conditions for company leasing because there is demand from employees and employers.
At first glance, the savings are sensational. But the reduced social security contributions are regularly left out of the calculations - another point criticised by the trade unions ...
Of course, this has an impact on the pension or daily sickness allowance - perhaps particularly noticeable if someone has a low income and wants to ride a very expensive bike, because even a leased bike costs money. Trade unions and employers' associations have agreed in their collective labour agreements that the respective impact on social benefits must be pointed out before a contract is concluded, and we also do this on our homepage. However, given a normal relationship between income and bike price, the benefits far outweigh the cost of buying.
