Tax breaks for bike commuters – a European trend
BRUSSELS, Belgium – Four European countries have introduced tax breaks for cycling to work or extended existing ones during the last months: France, Belgium, Luxembourg and Italy. This shows that the idea of rewarding sustainable commuting behavior through fiscal incentives is gaining ground throughout the continent.
In Belgium, which had introduced a reimbursement scheme based on the kilometers cycled to and from work already in 1999, the amount of the tax-free reimbursement has recently been raised to 23 eurocents per kilometer. The number of employees benefiting from this scheme has increased substantially during the last years, by 30% between 2011 and 2015 alone. This means that over 400,000 Belgians, or 9% of the country’s workforce, now receive a cycling reimbursement. Together, they cycled more than 420 million kilometers in 2015, creating important benefits in terms of public health, air quality, CO2 emissions reductions and congestion relief.
Belgium’s South-Eastern neighbor Luxembourg has recently undertaken a comprehensive fiscal reform and has used this opportunity to introduce fiscal incentives for cycling. From now on, tax payers will be able to deduct 300 euro from their personal income tax for the purchase of a new bike or e-bike. Companies will also have the possibility to give their employees bikes for both business and private use, and contrary to company cars, this ‘benefit in kind’ is completely tax free for the employee. Furthermore, at the end of the lease the employee can receive/purchase the bike tax-free from the company.
In 2015, France introduced a kilometric reimbursement scheme similar to the Belgian model, however, with severe restrictions concerning the maximum yearly tax-free amount. According to French sources, a decree is currently under preparation for public bodies to pay this cycling reimbursement to their employees. The tax-free payment would also be limited to € 200 per year and employee, which makes the scheme far less attractive than its Belgian counterpart. French cycling organizations, amongst which continue to advocate for abolishing the yearly limit and making the reimbursement scheme obligatory for all employers.
Finally, also in Italy things are moving in a sustainable way as several cities are planning to use a national experimental program for sustainable commuting to pay their citizens to cycle to work or to their university. For example, the city of Bari in Southern Italy is planning to hand out ‘mobility vouchers’ to employees and students that use their bike for their daily commute. These vouchers can then be used for the purchase of a new bike or for public transport card, for example.
For more information on this topic, check ECF’s study on fiscal incentives for commuting and their recent report on incentive schemes for e-cycling.