New Regulations From 2022
As of January 1, 2022, new tax regulations for bicycle benefits have been rolled out, offering better conditions for beneficiaries since the benefits are partially tax-free. Previously, the entire value of the benefit was taxed, but under the new rules, employees are taxed only on amounts exceeding 3,000 SEK per tax year, which is more advantageous than before! These rules apply to standard bicycles and electric bicycles, but not electric scooters. The intention behind these changes is to facilitate bicycle commuting, ultimately having positive impacts on both the environment and health.
Bicycle Benefit – For a Healthier and More Sustainable Workplace
One clear advantage of offering a bicycle benefit is promoting a climate-smart mode of travel for your staff, especially given that car travel accounts for a significant portion of climate impact. Did you know that traveling alone in a car has roughly the same climate impact per kilometer as flying? Another advantage of offering a bicycle benefit is enhancing the employer brand. With increasing environmental awareness and a stronger focus on sustainability among employees and job seekers, demonstrating that your company is a sustainable and appealing employer is a smart step in your employer branding efforts. In other words, you're making it easier for your employees to make healthy and environmentally friendly choices.
How Does It Work Practically?
As previously mentioned, the cost of the bicycle benefit is typically covered through a gross salary deduction for the employee. This entails a lower employer social security contribution and a tax saving for the employee, as the benefit cost is deducted before taxes are applied. However, it's important to note that a gross salary deduction can affect the employee’s pensionable income and sickness benefit qualifying income (in Swedish PGI and SGI).
Additionally, there are certain conditions to ensure that the bicycle benefit is only taxed on the portion exceeding 3,000 SEK per tax year:
- The employer provides the bicycle for a limited period.
- The employer pays for the bicycle directly by purchasing, renting, or leasing it.
- The benefit is available to all employees employed until further notice at the workplace.
Source: Skatteverket (in Swedish)
What If an Employee Leaves During the Lease Period?
If an employee terminates their employment before the bicycle is fully paid off, they typically have the option to buy the bicycle at its current market value – although this can vary based on the agreement between the employer and the employee.
How Is the Benefit Value Calculated?
The benefit value is determined based on the estimated depreciation of the bicycle and calculated using Skatteverket's calculation model. The bicycle supplier calculates this by assessing the bicycle's value and anticipated lifespan and then uses this data to derive the benefit value. Here, Skatteverket provides two examples of how benefit values are calculated for both regular and electric bicycles (in Swedish).
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