In the aftermath of the 2023 year-end legislation, the Belgian tax authorities have issued circular 2024/C/22 of 29 March 2024. In this circular letter the rules are clarified with respect to the tax exemption for bike allowances and company bikes attributed to employees and company directors. The key question will be whether the individual taxpayers are claiming actual professional expenses via their tax return or whether they are relying on the standard lump-sum professional expenses. The circular letter also covers what needs to be mentioned on the annual tax forms, as of income year 2024. Please find below the highlights.
In Belgium, a bike allowance and an employer or company provided bike are typically benefits that are not taxed in the hands of employees or company directors and no wage withholding taxes are due, provided that certain conditions are met. After all, these are benefits that stimulate and support an efficient, fast, green and thus a clean way of transportation.
Firstly, a bicycle allowance cannot exceed an amount of EUR 0,35 (indexed amount for income year 2024) per commuting kilometer which was effectively cycled. Secondly, there is an annual limit of EUR 3.500 (indexed amount for income year 2024, the circular still mentions EUR 2.500). In principle, a pro rata of this maximum amount will be applicable when the taxable period does not equal a full calendar year. When these maximum limits are exceeded, only the excessive part of the allowances will trigger a taxable income.
If an employee is not claiming actual professional expenses in their individual income tax return (but is relying on the standard lump-sum professional expenses which are calculated by the tax authorities), then they can additionally also make use of the commuting exemption of EUR 490 per year (indexed amount for income year 2024). Whilst this general exemption for the employer intervention in “other means of transportation” (i.e. not public or employer/company organized transport) can be applied on the part of the bike allowance which would exceed the annual limit of EUR 3.500, it cannot be applied on the bike allowance which would exceed EUR 0,35 per kilometer. Indeed, the portion of the biking allowance which exceeds the amount of EUR 0,35 per kilometer will anyhow be regarded as taxable income.
Please note that if an employee would decide to claim a deduction for actual professional expenses in the tax return, then they will not have access to the general commuting exemption of EUR 490 and their bike allowance will be regarded as a professional income, taxed progressively.
The benefit of the employer or company provided bike (bike, e-bike/speed pedelec) can be exempted from taxation provided that the employee or director effectively uses the bicycle for commuting purposes (fully or partially). If an employee or company director would not rely on the standard lump-sum professional expenses (which are calculated by the Belgian tax authorities) but would claim a deduction for actual professional expenses in their individual tax return, then a benefit in kind for the private use of the company bike will rise in the hands of the individual taxpayer, which is taxed progressively.
Up to and including income year 2023 (assessment year 2024), employers and companies had to have a written declaration (from the employee or company director that they would not claim actual professional expenses) to apply the exemption for Belgian wage withholding tax purposes. However, as of income year 2024, the abovementioned declaration is no longer needed.
Going forward, the verification (in order to determine whether there is a taxable item or not) will be done at the level of the individual income tax return and the subsequent tax assessment. Therefore, not only the full amount of the bicycle allowance, but also the benefit in kind resulting from the private use of the company bike must now be indicated on the annual tax forms 281.10 (employees) and 281.20 (company directors). These tax forms will have to be submitted towards the tax authorities by the end of February 2025. Incorporating these details (especially when a company bike is provided) may of course result in additional administrative work for employers and companies. If the taxpayer, in their individual tax return, claims a deduction of actual professional expenses, the Belgian tax authorities will have an immediate view on the (additional) taxable income which needs to be reflected in the tax return.
As there is no lump-sum valuation available for the benefit in kind of a company bike, the value should correspond with the actual value (and thus the cost saving) for the beneficiary (employee or company director). In the circular letter a listing can be found of all the elements which should be taken into account for the determination of the benefit in kind, such as: the type of bike, the accessories that come with it, services (repair, maintenance, insurance, etc.) and the extent to which the bicycle is made available, “permanently” (benefit should be determined on an annual basis and should be prorated in case the provision of the company bike starts or ends in the course of the year) or “only limited” (benefit should be determined taking into account the frequency and duration of use: per day, week or month). The value of the bicycle (and its accessories and related services) is always VAT inclusive (lease price paid by the employer in case of a bike lease, or the purchase value spread over 5 years increased with maintenance and repair costs, in case the bike is purchased by the employer). In the circular letter specific examples in function of the usage can be found.
As mentioned above, employees or company directors who via their individual income tax return claim their actual professional expenses (instead of relying on the standard lump-sum professional expenses) can not benefit from the ‘tax exemption’ for company bikes and bike allowances. In principle, they can fully deduct all costs incurred by the commuting use of the bike. However, if they are unable to demonstrate the actual costs for the usage of the bike, they can apply the lump-sum cost amount per effectively cycled kilometer (EUR 0,35 indexed amount for income year 2024).
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Sandrine Schaumont
Partner
Philip Maertens
Partner
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Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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