Cycling to work is not only healthy and environmentally friendly, but it can also be financially attractive for both employers and employees. Two popular ways to facilitate cycling for commuting are the bicycle plan and bicycle leasing.

Although both concepts sound similar, there are important differences in how they work and what advantages and disadvantages they offer. In this article, we outline the pros and cons of both options so you can make an informed decision when offering them as employee benefits.

What is a bicycle plan?

A bicycle plan is an arrangement where employees can purchase a bicycle through their employer with tax benefits. This is usually done by temporarily lowering the employee's gross salary, resulting in less tax paid. The bicycle is purchased in one payment, and the employee repays the bicycle through a deduction from their gross salary, usually spread over several months.

Work-related expenses scheme and bicycle plan: limitations and challenges

Many companies use the Work-related expenses scheme (WKR) to facilitate the bicycle plan. The WKR allows employers to provide tax-exempt reimbursements and benefits to employees. However, there is limited space within the WKR, which means companies must decide how this space is allocated. In practice, it appears that only a small percentage of employees, often between 5% and 10%, utilize the available space, leaving little for other employees. This sometimes makes the bicycle plan more difficult to implement, especially in larger companies where the WKR is already filled with other reimbursements and benefits. This is one of the reasons why bicycle leasing is gaining popularity.

Advantages of a bicycle plan

1. Direct ownership of the bicycle: Once the employee acquires the bicycle through the bicycle plan, he or she immediately becomes the owner of the bicycle. This means the employee can use, maintain, and sell the bicycle at their discretion.

2. Tax benefits: Because the bicycle is paid for through a deduction from gross salary, employees benefit from tax advantages. This can significantly reduce the purchase costs of the bicycle.

3. Flexibility in choice: Employees can often choose a bicycle themselves, within the terms of the bicycle plan. This provides the freedom to select a bicycle that fits their personal preferences and needs.

Disadvantages of a bicycle plan

1. One-time payment: Although the gross salary is reduced, the employee must finance the full purchase price of the bicycle at once. This can be a large expense, even with the tax benefits.

2. Limited tax benefits due to WKR: Due to the limited available space within the WKR and the fact that it is often already filled at companies, not all employees can optimally benefit from the bicycle plan. This limits the accessibility of the bicycle plan and can lead to inequality within the workforce.

3. No additional services: A bicycle plan usually does not include extra services, such as maintenance or insurance. Employees have to arrange and finance these matters themselves.

What is bicycle leasing?

Bicycle leasing is an arrangement in which an employer leases a bicycle and makes it available to the employee. The employee pays a monthly leasing fee through their gross salary. After the leasing period, the employee can purchase the bicycle for its residual value, extend the lease, or return the bicycle.

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Advantages of bicycle leasing

1. Spread costs: In bicycle leasing, the costs are spread over a longer period, so employees do not have to pay a large amount at once. This makes it more financially accessible.

2. Includes maintenance and insurance: A bicycle lease contract often includes maintenance, repairs, and insurance. This relieves the employee and ensures that the bicycle is always in good condition without additional unexpected costs.

3. Tax benefits: Just like with the bicycle plan, the leasing fee is often deducted from the gross salary, resulting in a tax advantage. This makes leasing a bicycle fiscally attractive.

Disadvantages of bicycle leasing

1. No direct ownership: During the leasing period, the bicycle remains the property of the leasing company. This means that the employee has limited flexibility regarding adjustments to the bicycle or selling the bicycle.

2. Residual value and final settlement: At the end of the leasing period, the employee can acquire the bicycle, but this often comes with a residual value that must be paid. These costs can be higher than expected.

3. Obligations upon departure: If an employee leaves during the leasing period, complications may arise regarding the lease contract. This can lead to unexpected costs or the need to return the bicycle.

Conclusion: which option is better?

The choice between a bicycle plan and bicycle leasing strongly depends on personal preferences, financial situation, and the availability of the WKR with the employer.

If you prefer to be the direct owner of the bicycle and have the budget to finance it, then a bicycle plan may be the best choice. However, with the increasing limitations of the WKR, bicycle leasing can be a more attractive secondary employment benefit due to the spread costs and included services such as maintenance and insurance.

With the largest offering in the area of employee well-being in the Netherlands, Alleo can help you make the right choice for your situation. Whether you choose a bicycle plan or bicycle leasing, we offer flexible and attractive benefit solutions that meet the needs of both employers and employees. This way, you invest not only in a more sustainable mode of transportation but also in the health and satisfaction of your employees.

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Want to learn more about flexible benefits and the lease bicycle? Check out our webinar together with Lease a Bike via this link.